New orders from Irish factories fall sharply: PMI 

New orders placed with Irish factories fell sharply in December.

New orders placed with Irish factories fell sharply in December and overall activity contracted for the second successive month, reflecting worsening business conditions, a major manufacturing survey shows.

The fall in new orders was the seventh successive monthly decline, although new export orders as opposed to goods destined for domestic markets fell more slowly, according to the AIB Ireland Purchasing Managers' Index, or PMI, which surveys the managers best placed to monitor manufacturing activity. 

The overall reading of 48.7, which although unchanged from November, was still below 50 which suggests manufacturing activity is contracting. Components such as stocks and employment showed much more positive results, however.      

For manufacturers, there was also better news on inflation with the rate of input price inflation easing, while their output prices rose from November. 

The latest index "points to a continued deterioration in business conditions in the sector, with new orders, in particular, falling sharply", said Oliver Mangan, chief economist at AIB, in commentary on the Irish index   

"Orders have been in decline since June reflecting weakening demand. This has resulted in the downturn in manufacturing activity seen in the closing two months of the year," Mr Mangan said, adding that the fall in new export orders was relatively less severe. 

Global economy

Surveys of purchasing managers are carried out on a monthly basis across the world, and the Irish results are also closely watched because the large number of multinationals based here selling their goods abroad can provide insights into global economic conditions.

Buoyant stock prices in Europe might be due to manufacturing survey results, which pointed towards a rebound in optimism among eurozone factory managers.

The final manufacturing purchasing managers’ index, or PMI, for the eurozone bounced to 47.8 in December from November’s 47.1. 

"Europe is taking the latest round of PMIs well enough, as the final readings help to confirm the view (hope?) that the worst may be over for the EU bloc’s manufacturers, especially as energy prices recede to the levels of last February," Russ Mould at AJ Bell, wrote. 

The pan-European Stoxx-600 index climbed 0.8% in the session, retracing some of the nearly 12% it lost in 2022. 

Additional reporting Reuters