Manufacturing demand weakens but employment increases 

Survey points to broadly stable though subdued business conditions in the sector

The main positive from the October survey was a renewed increase in manufacturing employment. Picture: iStock

The Irish manufacturing sector entered the final quarter of 2020 with demand continuing to weaken according to the latest AIB Purchasing Managers Index (PMI).

A slight rise in employment was the main positive from the October survey findings, while output was broadly stable following September's renewed fall. Firms cut purchasing activity at a faster rate as they continued to deplete inventories. The 12-month outlook remained positive but was the weakest since May.

The slight upward movement in the PMI masked contrasting trends between its five components. The employment index signalled growth for the first time in three months, output was broadly stable, new orders fell further while the suppliers' delivery times and stocks of purchases components declined.

Demand conditions in the Irish manufacturing sector continued to weaken in October, with new orders falling for the second month running following a rebound over the summer.

The main positive from the October survey was a renewed increase in manufacturing employment, only the third round of job creation in the past 12 months. This partly reflected sustained optimism around future production, with the respective index remaining in positive territory. 

Oliver Mangan, AIB Chief Economist, said the details of the October survey point to broadly stable though subdued business conditions in the sector.

"On a positive note, manufacturers added to their workforces in October, with employment rising for only the third time in the past twelve months, although the rate of increase was quite modest," he said.

Firms remain positive on the 12-month outlook, though levels of confidence continued to slip from their recent highs back in June.

"It is noteworthy that the Irish PMI reading for manufacturing in October continued to lag behind elsewhere in Europe and the US, which have enjoyed a stronger and more sustained rebound in activity post the Covid lockdown implemented earlier in the year," Mr Mangan added.