Ireland: Manufacturing PMI drops in July, but remains in expansionary territory
The AIB manufacturing Purchasing Managers’ Index (PMI) edged down to 63.3 in July, following June’s 64.0. Although the print marked a three-month low, the index remained well above the 50-threshold indicating another robust improvement in Irish manufacturing business conditions compared to the previous month.
July’s result was largely attributed to record-rate growth in new orders, as the easing of restrictions globally firmed foreign and domestic demand. However, manufacturers were able to only partially meet demand, as supply constraints capped output growth and led to a significant increase in backlogs of work. Raw material shortages coupled with logistics constraints sustained continued to exert upward price pressures, with inflation rate rising at a marked rate, albeit softening from the prior month. In a bid to protect margins, manufacturers sought to pass on costs to customers, with factory gate prices hitting a fresh record high.
Oliver Mangan, AIB chief economist, noted:
“The sub-components of the Irish PMI survey all point to an on-going strong improvement in business conditions in the sector. New orders recorded its third straight record high, aided by a very strong performance from new export orders as well as on-going strength in domestic orders. The sector continued to add to the size of its workforce, with employment rising for a tenth month running […] Meanwhile, the 12-month outlook for production improved in July, with over half of firms expecting a pick-up in business over the coming year.”