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Ireland PMI October 2019

Ireland: Business conditions in the manufacturing sector deteriorate for fourth consecutive month in September

Business conditions in the Irish manufacturing sector deteriorated for the fourth month running in September, with activity contracting at virtually the same pace as in August. The AIB manufacturing Purchasing Managers’ Index (PMI) inched up to 48.7 in September from 48.6 in July.

September’s reading reflected a fall in production for the third consecutive month and new business for the fifth month running. The latter declined at the joint-fastest rate since January 2012, as demand continued to weaken in domestic and overseas markets. In particular, new orders from abroad declined at the swiftest rate in just over a decade, amid softer sales to the UK. Consequently, backlogs of work dropped for the thirteenth consecutive month, while manufacturers kept staff levels steady from the previous month—the first time in three years that employment had failed to rise.

Meanwhile, on the price front, higher prices for raw materials, notably fuel and steel, lifted firms’ cost burdens. That said, the rate of input price inflation eased to a 38-month low, which prompted manufacturers to lower their output prices in a bid to increase sales. On the outlook, ongoing Brexit uncertainty weighed on optimism over production in the year ahead, which waned to a seven-year low in September. New investment and prospects of recovery in overseas orders, however, kept sentiment in positive territory.

Commenting on the latest print, Oliver Mangan, AIB chief economist, stated:

“The weak Irish data of recent months clearly show that the sharp slowdown in global manufacturing over the past year or more is being felt in Ireland also. Brexit uncertainty is an additional negative factor weighing on activity here.”

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