Ireland: Manufacturing PMI remains robust in March, defying the wider global downturn in the sector
Business conditions in Ireland’s manufacturing sector eased slightly at the end of the first quarter, but nonetheless remained robust. The AIB manufacturing Purchasing Managers’ Index (PMI) inched down to 53.9 in March from 54.0 in February, remaining above the critical 50-point threshold that separates expansion from contraction in manufacturing activity. The index has seen an uninterrupted improvement in business conditions for close to six years now. Moreover, the reading is well above the manufacturing PMI for the Eurozone in March, which fell to a nearly six-year low of 47.5.
March’s reading was underpinned by softer upturns in output and new orders, owing to weaker demand. While new business from overseas markets rose more rapidly, thanks to improved foreign demand, overall new orders decelerated. Despite the slight slowdown, manufactures hired workers at a faster rate. On the price front, higher prices for raw materials raised cost burdens and prompted firms to raise output prices. Meanwhile, business sentiment in the sector strengthened on expectations of higher output in the next 12 months.
Commenting on the latest print, Oliver Mangan, AIB Chief Economist, stated:
“As in February, the impact of Brexit was again evident in the March survey data as some firms act to avoid possible disruptions to supply chains. Pre-production inventories increased at their fastest pace in the 21-year history of the survey. Purchases of raw materials and semi-finished goods remained at high levels as firms moved to guard against possible delays or interruption to supplies owing to Brexit. Overall, the continued strength of the Irish Manufacturing PMI is very notable given the loss of momentum in the sector globally in recent months, especially in Europe. It augurs well for the growth prospects of the Irish economy this year.