Irish manufacturing output growing for fifth straight month

Irish manufacturing output recorded another “robust increase” in May, extending the current period of growth to five months, according to AIB.

Some Irish firms recorded subdued spending by US clients, but concerns about the impact of tariffs and global economic uncertainty had eased slightly in May.

The bank’s manufacturing purchasing managers’ index (PMI) retracted slightly to 52.6 in May, after April’s 34-month high of 53.0.

The index remained above the neutral 50 threshold, indicating overall expansion in the sector for the fifth month running, the longest growth sequence in more than two years.

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The latest improvement in overall business conditions was driven by relatively strong rates of output and new business growth, AIB said.

“The rise in May was broad-based, with robust growth in output and new orders, and signs of easing tariff-related concerns,” said David McNamara, AIB chief economist.

Mr McNamara said the reading for the Irish manufacturing industry “remains above the flash May readings for the Eurozone, US and UK at 49.4, 52.3 and 45.1, respectively”.

AIB has increased its activity expectations for manufacturing business, having recovered from April’s eight-month low. Staff hiring has increased to its fastest rate since January, in reaction to rising workloads and improving projections for customer demand.

“Export sales remained a weak spot in May, with total new work from abroad decreasing for the second month running,” the PMI said, noting anecdotal evidence from goods producers that export demand from US and UK clients was down on the previous month.

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The destocking streak ongoing since February continued in May, with survey respondents indicating deliberate inventory reduction strategies or subdued demand as causal factors.

Manufacturers saw a “further sharp increase” in input prices, down only slightly from the 26-month high in April with the input price inflation linked to commodities and other raw materials.

There was a corresponding level of output price inflation which increased slightly, with manufacturers passing on higher input costs they incurred in May, but AIB’s chief economist noted the rate of inflation remains “well below that observed throughout the past 12 months”.

“Despite ongoing geopolitical and tariff uncertainty, Irish manufacturers maintained a generally upbeat assessment of the outlook for activity levels over the coming year.

“Around 39 per cent of the respondents predict a rise in output levels during the year ahead, while 9 per cent expect a decline,” Mr McNamara said, reflecting data collected from the May 12th to 22nd.