Renewed downturn in Irish manufacturing order books, but business optimism improves slightly
The AIB Ireland Manufacturing PMI® for December pointed to worsening business conditions as 2023 drew to a close, representing a setback after the stabilisation seen during November. Overstocked customers and caution regarding the near term economic outlook remained headwinds to new order intakes in December.
Irish manufacturers also reduced their own stocks of purchases at the fastest pace since October 2020. On a more encouraging note, output expectations for the year ahead edged up to a three-month high.
Commenting on the survey results, Oliver Mangan, AIB Chief Economist, said: “The AIB Irish Manufacturing PMI survey for December showed a slight deterioration in business conditions in the month. The headline index fell to 48.9 from 50.0 in November. It has been confined to a narrow 48-50 range during the final four months of 2023. The December reading was also very close to the average for year of 49.1. The Irish PMI remained well above the flash December readings for the Eurozone and UK, of 44.2 and 46.4, respectively. It was also higher that the flash US index of 48.2.
“A marginal fall in output, renewed decline in new orders, stable employment and marked destocking were the key features of the December PMI survey. While new orders fell, partly due to a focus on destocking, export orders rose for the first time in four months, with manufacturers reporting an upturn in demand from the UK. Meanwhile, difficulties in recruitment was cited as the main factor constraining employment growth, which was broadly unchanged in the month.
“Firms continued to pursue inventory reduction strategies against a backdrop of subdued customer demand. This was reflected in further marked falls in stocks of both inputs and finished goods, with the former declining at the sharpest pace in over three years amid a steep drop in the purchasing of inputs.
“Manufacturers, however, remained optimistic on the outlook for the year ahead, with the business expectations index edging up to its highest level since September. Firms saw renewed pressure on margins, though, with input prices moving higher in December, as factory gate prices declined for the eighth consecutive month in the face of ongoing competitive pressures to lower prices.”
