Manufacturing & Supply Chain

November PMI data reveal encouraging signs for Irish manufacturing sector

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November PMI data reveal encouraging signs for Irish manufacturing sector

November PMI data reveal encouraging signs for Irish manufacturing sector
December 01
10:24 2020
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The Irish manufacturing sector regained some momentum in the penultimate month of 2020 as business confidence improved, the November PMI® data from AIB indicated. New orders and output both returned to growth, and the manufacturing workforce registered a back-to-back rise for the first time in over a year. Consequently, firms’ expectations for output over the next 12 months were the strongest since the start of the year.

The headline AIB Ireland Manufacturing PMI® is a composite single-figure indicator of manufacturing performance. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of the sector.

Commenting on the survey results, Oliver Mangan, AIB Chief Economist, said: “The AIB Irish Manufacturing PMI for November rose to 52.2 from 50.3 in October. It was the third highest reading since April 2019, which is impressive considering that the Irish as well as some other European economies were back in lockdown in November. The index fell to very low levels during the first Covid lockdown in the spring. However, the manufacturing sector has remained open during this lockdown.

“All five components of the PMI rose in November and all were in positive growth territory above 50. New orders increased in the month, which translated into a rise in production. The growth in orders, though, was modest so outstanding backlogs continued to decline. Very encouragingly, employment rose for a second consecutive month, with the pace of job creation the joint-strongest since June 2019.

“The impact of the imminent end to the Brexit transition period manifested itself in some stockpiling, with purchases of inputs rising and a sharp jump in the stocks of inputs. Supply chains remained under pressure, with manufacturers reporting difficulties in sourcing inputs and delays in deliveries. Price pressures are also rising, with the strongest increases registered in both input and output prices since early 2019.

“Firms, though, are increasingly optimistic about the 12-month outlook for production. Sentiment rose strongly in November on the back of the positive news on Covid vaccines, reaching its highest level since January. Overall, the November PMI data show that, as in other countries, the sector is coping well with the second lockdown and is increasingly confident about prospects for 2021.”

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