Irish manufacturing activity increased at its slowest pace in five months in August, as output and new orders lost momentum, according to new data.
The AIB Ireland Manufacturing Purchasing Managers Index (PMI) dipped to 51.6 in August from 53.2 recorded for the previous month, according to the bank. Any figure greater than 50 indicates overall improvement of the sector.
“Output rose at a slower pace in August, with respondents citing more subdued demand conditions. This was also reflected in the near stagnation in new orders growth and a renewed fall in export orders,” said David McNamara, AIB’s chief economist.
Anecdotal evidence suggested that resilient domestic economic conditions had supported new business gains in some cases, while weak export sales were a headwind, AIB said. Reflecting this, new work from abroad decreased for the fourth time in the past five months and at the fastest pace since May.
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“Several firms cited the UK as a key source of weakness in client demand. However, employment continued to expand sharply, with the pace of hiring slightly below the three-year high reached in June and July.”
On a positive note, cost pressures eased in August as input price inflation moderated to its slowest since June 2024, AIB said. A number of firms reported efforts to pass on higher input prices after a period of robust cost inflation in the first half of 2025.
Business activity expectations picked up in August. Around 44 per cent of the survey panel predict a rise in output during the year ahead, compared with 4 per cent that forecast a decline. This indicated the strongest business optimism since December 2024.
Survey respondents noted hopes of a turnaround in global trade conditions and improvement in customer demand. Elevated business confidence also supported another solid rise in manufacturing employment numbers, although the rate of job creation slipped to a three-month low.
The AIB Ireland Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 250 manufacturers.
