Lower export sales hit Irish factories

In the latest AIB Purchasing Managers Index, manufacturers reported a decline in spending among their clients, which created lower production volumes compared to August.

The headline PMI was in contraction territory last month at 49.6, slightly below the neutral 50 threshold and down from August's six-month high of 50.8. File Picture: David Creedon

Irish factories saw new orders fall at the fastest pace so far this year in September, driven by a lacklustre demand in key export markets including the UK and the eurozone.

In the latest AIB Purchasing Managers Index (PMI) for manufacturers, a leading industry survey, manufacturers reported a decline in spending among their clients, which created lower production volumes compared to August.

"There was only a marginal decline in manufacturing production, though, with firms continuing to work through order backlogs, which helped maintain output levels,” said AIB chief economist Oliver Mangan.

The headline PMI was in contraction territory last month at 49.6, slightly below the neutral 50 threshold, and down from August's six-month high of 50.8.

“The Irish PMI remains higher than elsewhere,” said Mr Mangan. "The flash September Manufacturing PMI readings were again very weak in the eurozone and UK, at 43.4 and 44.2, respectively, while the US index stood at 48.9."

Firms continued to work through order backlogs though, which helped maintain output levels, despite a fall in production volumes for new orders. Stocks of inputs and finished goods both increased in September, but at only marginal rates.

The survey also showed inflation pressures eased as input prices declined for the sixth consecutive month following a drop in the cost of raw materials and energy. These decreases were passed through to factory-gate customers.

“The drop in input costs continued to be passed on in lower factory-gate prices, which fell markedly at their quickest pace in nine years," said Mr Mangan.

Meanwhile, job-creation momentum continued last month, down slightly down from August's six-month high, as manufacturers increased their staff in the hopes of a rebound in production.

Optimism about future performance among manufacturers edged downwards compared to August, but was still the second-highest since March.

Survey respondents mostly commented on new product launches, planned investment spending, and expectations of a turnaround in export conditions.