Irish manufacturing growth slows to 10-month low in October

Investing.com -- Ireland’s manufacturing sector growth slowed to its weakest pace in 10 months during October, with production stagnating amid subdued demand conditions.

The AIB Ireland Manufacturing Purchasing Managers’ Index (PMI) fell to 50.9 in October from 51.8 in September, marking the slowest improvement since the current growth phase began in January, according to data released Monday.

While the reading remained above the 50.0 threshold that separates growth from contraction for the tenth consecutive month, all five PMI sub-components showed weaker contributions.

Production volumes stagnated in October, ending nine months of sustained expansion. Manufacturers cited sluggish demand conditions and lower backlogs of work as factors behind unchanged output levels.

New orders expanded only marginally, with growth easing compared to September. Companies reported intense competition for new business and ongoing headwinds from lower export sales. The reduction in new orders from abroad accelerated to the fastest pace since May, primarily due to fewer sales in European markets.

Employment growth continued for the eleventh straight month, though at a slower pace than September. Manufacturers mentioned long-term business expansion plans, but some noted staff shortages and difficulties finding skilled candidates.

Purchasing activity increased only marginally in October as companies adopted cautious inventory management strategies. Stocks of purchases decreased for the third consecutive month and at the sharpest rate since May.

Inflationary pressures moderated, with input costs and prices charged both rising at the slowest rates since May 2024. Lower raw material prices contributed to the slowdown in input cost inflation.

"The AIB Irish Manufacturing PMI remains above the flash September readings for the Eurozone and UK at 50 and 49.6, respectively, but below the US at 52.2," said David McNamara, AIB Chief Economist.

Looking ahead, manufacturers maintained a positive outlook, with 45% of respondents predicting higher output over the next 12 months compared to just 9% forecasting a decline. However, the overall degree of optimism fell to a three-month low.

Companies cited new product launches and entry into new overseas markets as growth drivers, with some expressing hope for a turnaround in sluggish global economic conditions.

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