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Manufacturing & Supply Chain

Irish manufacturing sector conditions weaken amid reports of muted customer demand

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Irish manufacturing sector conditions weaken amid reports of muted customer demand

Irish manufacturing sector conditions weaken amid reports of muted customer demand
May 08
10:08 2023
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The downturn across Ireland’s manufacturing sector deepened at the start of the second quarter of the year amid a sharper contraction in factory production and a sustained decline in new orders. Weak demand conditions across the sector did, however, help to further restore some stability to supply chains, with delivery delays shortening to the greatest extent since August 2009. Inflationary pressures similarly eased with April data from the AIB Ireland Manufacturing PMI® indicative of the first fall in average operating expenses since June 2020 and the softest increase in selling prices in 28 months.

Commenting on the survey results, Oliver Mangan, AIB Chief Economist, said: “The AIB Irish Manufacturing PMI for April showed a further weakening of activity in the sector, with the headline index falling to 48.6 from 49.7 in March and 51.3 in February. Thus, the sector continues to struggle as has been the case since last summer. However, this is in line with the trend in most other economies. The flash April manufacturing PMIs for the Eurozone and UK fell further to a weak 45.5 and 46.6, respectively, though the US index picked up to 50.4. Overall, the indices point to ongoing subdued manufacturing activity globally.

“Irish manufacturing remained weighed down in April by ongoing weakness in orders and production, reflecting subdued demand conditions, including in overseas markets. With order books declining, spare capacity rose further as backlogs of work maintained their steep decline, while stocks of finished goods increased. Firms continued to scale back the purchases of inputs at a marked pace, resulting in the first decline in the stock of inputs in two years.

“On a positive note, employment increased for a fifth consecutive month, albeit at a modest pace. There was also a further shortening in supplier delivery times, with the easing of pressures on supply chains being aided by the general weakness of demand. Irish manufacturers remain optimistic about the future, but there was a significant drop in the level of confidence from March.

“Meanwhile, there was a further notable easing of inflationary pressures in the manufacturing sector. Indeed, input prices fell for the first time since June 2020 amid moderating raw material prices. Output prices continued to rise, but at their slowest pace in 28 months.”

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