Price pressures led to a sharp decline in new purchasing orders from Irish factories during September, but helped alleviate supply chain issues.
Irish factories recorded the fastest drop in new orders since January 2021 as high prices have created low demand, according to AIB’s latest purchasing managers index (PMI).
“The Irish data for September were a bit of a mixed bag. 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,” AIB’s chief economist Oliver Mangan said. He added:
Irish factories continued to hire staff during the period as they were not under pressure to complete high levels of new orders. Employment rose at its fastest pace in three months.
Lower demand reportedly reflected increased caution among customers due to the risk of a recession in the economy, high prices, and geopolitical uncertainty.
Inflationary pressures remain high for factories despite some easing in supply and capacity constraints, the report found.
“Input costs continued to rise sharply, though the rate of increase slowed further to a 19-month low,” said Mr Mangan.
However, delayed delivery of previously ordered items led to a further rise in input stocks. Some firms mentioned recent bulk buying to avoid price increases.
The results of the PMI are being closely watched for evidence that the forces of recession may be building for many major economies.
The headline finding posted a reading of 51.5 in September, up from 51.1 in August. Any measure below 50 shows that output contracted in the month.
The headline figure signals improvement for business conditions in Ireland compared to the UK and Europe.
The flash September manufacturing PMI for both the UK and the eurozone is in contraction territory at 48.5.