Ireland's manufacturing sector takes hit from drop in new orders

The manufacturing sector in Ireland saw its first decline in over a year in June, data from S&P Global showed on Friday, but was still in growth territory.

The AIB Ireland manufacturing purchasing managers' index dropped to 53.1 in June from 56.4 in May.

‘The latest PMI survey data from AIB highlighted the increasingly negative impact of rising costs on demand in the Irish manufacturing sector. New orders decreased for the first time in 16 months during June, with production also down. This represented a marked turnaround from the picture at the start of the second quarter, when both were rising sharply,’ S&P Global said.

Despite the drop in output and new orders, job rises and order backlogs helped the sector remain above the 50.0 no-change mark.

S&P Global also noted cost pressures remained elevated in June.

‘There are clear signs that the slowdown in global manufacturing activity is extending to Ireland in the AIB Irish manufacturing PMI survey for June...While the index remained in expansion territory, it was the lowest reading since February 2021. The fall was in line with the trend seen in other economies - the flash June indices fell to 52.0 and 53.4 in the Eurozone and UK, respectively, with the US index declining to 52.4,’ AIB's Oliver Mangan said.

‘The marked softening in business conditions in Irish manufacturing was led by the first declines in new orders and output since early 2021, reflecting the increasingly negative impact of rising inflation on demand. There was a particularly steep fall in new export orders. The drop in orders saw an easing in capacity pressures, as evidenced by declining backlogs for a second month running.’

The PMI index is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 250 manufacturers. The data was collected from June 13 to 23.

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