Irish manufacturing stabilises in November but exports remain subdued

Business conditions in the Irish manufacturing sector stabilised in November after modest downturns in September and October, according to the latest purchasing managers’ index published by AIB.

Survey respondents highlighted a slight uptick in production requirements, helped by signs of a turnaround in customer demand. Export sales remained subdued, however, with new orders from overseas declining for the third consecutive month.

The headline index rose to a reading of 50, up from 48.2 in October, to give the second-highest reading for the AIB Irish Manufacturing PMI survey since February.

“Very marginal increases in output and orders combined with a modest rise in employment were the key features of the November PMI data,” said AIB chief economist Oliver Mangan.

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“Output rose fractionally following eight months of decline. Similarly, new orders edged slightly higher having fallen for most of the last 18 months. Export orders, though, decreased again in November, with firms reporting continued subdued demand conditions in overseas markets.”

Employment rose modestly for a fifth consecutive month, with additional recruitment linked to long-term business expansion plans and forthcoming new project starts.

“Firms reported deliberate inventory reduction strategies against a backdrop of fewer supply bottlenecks and subdued customer demand. This was reflected in marked falls in stocks of both inputs and finished goods, with the latter declining at the sharpest pace in nearly two years,” he said.

Manufacturers commented on signs of a gradual turnaround in customer demand and a subsequent rise in production requirements. However, a number of firms noted that lacklustre global economic conditions had constrained manufacturing order books.

Input costs, meanwhile, decreased slightly in November, helped by lower prices paid for key raw materials. Pressure to pass on falling input prices contributed to another month of declining output charges. Manufacturers have now recorded price discounting for seven consecutive months.

Finally, some 49 per cent of goods producers said they expected a rise in output over the year ahead, compared to just 9 per cent who said they anticipated a reduction.

However, the degree of business optimism eased to its lowest since July, with anecdotal evidence suggesting that concerns about the broader economic outlook at home and abroad dampened business confidence over the course of the month.