Ireland: Manufacturing PMI falls to 11-month low in February
The IHS Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 57.8 in February from January’s 59.4. As such, the index remained above the 50 no-change threshold, signaling a continued, albeit weaker improvement in business conditions from the previous month.
The weaker reading—the softest in 11 months—was due to an across-the-board deterioration in the index’s subcomponents, as firms continued to be hit by supply bottlenecks and Covid-19-related labor shortages, with employment growth at its lowest level in a year. Output growth was at its lowest rate in nearly a year, while backlogs accelerated at the third-highest pace in the index’s history. That said, the PMI remained well above its long-run average. In addition, new orders growth was relatively resilient, falling only slightly amid support from fewer Covid-19 restrictions plus more customers and exports.
AIB’s Oliver Mangan commented on the challenges posed to firms by sky-high cost pressures:
“The combination of strong demand, disruptions to supply chains, Brexit and continuing upward trend in prices of raw materials, energy and transportation, meant the pressure on costs remained very intense. Indeed, the rate of increase in both input and output prices reaccelerated to near record levels in February.”
That said, Mangan also highlighted firms’ optimistic economic outlook for this year:
“[Firms] remain very positive on the 12-month outlook for production, as customer demand is expected to continue strengthening with the ending of Covid-19 restrictions.”