Ireland’s manufacturing sector ended the year at a low ebb but business owners are more optimistic about the outlook for the year ahead than at any time in the last 15 months.
Production volumes fell for the first time in three months with companies reporting weaker order books and sluggish demand. There was a noticeable decline in new orders, with manufacturers noting a general slowdown in overseas demand conditions, particularly across the UK and the euro zone.
At 49.1, the seasonally adjusted AIB Ireland manufacturing purchasing managers’ index for December was down on the November figure of 49.9. Anything below a reading of 50 signals contraction in activity levels in the sector. The reading was the lowest since June and well below the long-run average for the series, of 52.
Commenting on the results, AIB chief economist David McNamara said the sector had lost further momentum in December, which means activity has now fallen in eight months throughout 2024.
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“Despite the fall, the Irish manufacturing PMI remains above the flash December readings for the euro zone, the US and the UK at 45.2, 47.3 and 48.3, respectively,” he said.
Business optimism improved in December, contrasting with the weaker trend noted for current production volumes. About half of the survey panel predict an increase in output over the course of 2025, with only 6 per cent expecting a downturn.
Confidence was linked to new product launches, expectations of a rebound in business conditions and expansion in overseas markets, despite some concerns about potential looming US tariffs and global trade tensions in 2025, the report said.
And despite the lull, the seasonally adjusted employment index recorded growth for the first time in four months. Employers attributed the increase to forthcoming new projects and long-term business investment plans
On costs, the rate of inflation on inputs edged up from the five-month low seen in November, with raw material and transport costs rising. Factory gate prices rose again but at a slower rate than before. Some firms suggested that competitive pressures and subdued customer demand had constrained pricing power.
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