Manufacturing output dropped slightly in September, while new orders fell at the fastest rate since January 2021, according to AIB’s latest survey.
eptember marked the fourth successive monthly contraction in new orders. According to the data, this marked the longest sequence of consecutive monthly declines since mid-2019.
New export orders were also down for the fourth month in a row.
This slowdown in new orders was attributed to increased caution among customers due to the risk of an economic slowdown, higher input prices, as well as geopolitical instability.
“New orders, including export orders, fell for a fourth consecutive month, a worrying sign reflective of weakening demand in the face of rising price pressures,” said AIB chief economist Oliver Mangan.
This was also demonstrated by the new orders to inventories ratio across the industry which fell to its lowest level since May 2020 when Ireland was in lockdown.
Production in the manufacturing industry in Ireland also declined for the fourth month running in September but AIB highlighted that this most recent decline was weaker than the drop in new orders.
While new work fell, companies dedicated themselves to clearing existing backlogs.
Incomplete work fell for the fifth month in a row in September and at the fastest rate since January last year as a result.
Employment also continued to rise in the sector.
“Manufacturers continued to work to clear backlogs and rebuild stocks of finished goods,” Mr Mangan said.
“As a result, firms were still hiring, with employment rising at its fastest pace in three months.”
Input prices were on the rise again last month, linked to existing global shortages, the strong US dollar, as well as high energy prices. The rate of increase slowed to a 19-month low. Despite this, Irish manufacturers cut their volume of purchases last month.
Some firms also reported bulk buying in order to avoid future price rises.
Supply chain pressures eased but the delayed delivery of items ordered previously contributed to a further rise in input costs, according to the AIB data.
AIB also reported that the overall rate of inflation across the sector eased to a 19-month low, a fall that was attributed to weaker demand and reduced supply chain pressures.
Ireland’s purchasing manager’s index (PMI) rose slightly to 51.5 from 51.1 in August. Any reading over 50 is deemed growth.
However, this was below Ireland’s long-term average PMI of 52.5.
September also saw the second-weakest rate of growth since October 2020.
Ireland recorded a stronger performance in September compared to its eurozone and UK counterparts.
Mr Mangan pointed to “much weaker readings” across the rest of Europe. The manufacturing PMI was in contraction territory at 48.5 in both the eurozone and UK.
Last week, Eurostat figures showed that inflation across the eurozone hit 10pc for the first time in September.
Irish consumer prices rose 8.6pc last month, down from 9pc in August.
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