Ireland: Business conditions in manufacturing sector deteriorate in November
Business conditions in the Irish manufacturing sector deteriorated in November, after having improved in October. The AIB manufacturing Purchasing Managers’ Index (PMI) declined to 49.7 in November from 50.7 in October, thus moving below the 50-threshold that separates expansion from contraction in manufacturing activity.
November’s fall largely reflected a drop in output and export sales. Production fell slightly in November, contrasting October’s increase. Although new orders increased in November, they did so at a slower pace than in October. Meanwhile, export sales contracted at a sharper rate in November amid weaker demand from U.S. and UK markets, while firms cut their staffing numbers for the first time since September 2016 due to subdued customer demand. On the price front, higher raw material prices increased firms’ cost burdens and pushed the rate of input inflation to the quickest in seven months, while output charge inflation slowed somewhat from October. Lastly, firms were more optimistic on the outlook in November, marking the highest level of confidence in five months, amid expectations of higher output growth in the coming year.
Commenting on the latest print, Oliver Mangan, chief economist at AIB, stated:
“The Irish November PMI reading of 49.7 remains well above the average for the Eurozone, which is put at 46.6, and the level of 48.3 in the UK as the stronger domestic economy helps support activity here. A further positive note is that confidence among Irish manufacturers regarding future output rose to a five-month high in November. Nonetheless, Brexit uncertainty continues to weigh on confidence levels, which remain low on a historical basis.”