Manufacturing contracts during September following fall in export sales

Hiring also fell marginally during September, with survey respondents linking this to non-replacement of departing staff. 

Irish manufacturers suffered a decline in work during September driven by a fall in export sales as well as subdued customer demand, the latest AIB purchasing manager’s index (PMI) shows.

In September, the PMI registered a reading of 49.4, down from 50.4 in August. The PMI reading is derived from a number of production indicators, with any reading below 50 indicating a contraction. 

Chief economist at AIB David McNamara said manufacturing activity had now fallen in six of the last nine months, with the deterioration being “driven by a fall in output, new orders and employment, mirroring a broad-based slowdown in the sector in Europe”.

"Output fell in September for the first time since June, reflecting weak demand conditions. This was also evident in a further decline in new orders, extending a run of contraction back to March 2024,” he said.

In addition to the fall in exports, the PMI survey also pointed to strengthening cost pressures faced by goods producers, mostly due to rising prices paid for raw materials. This ushered in the strongest rate of factory gate price inflation since February 2023.

Hiring also fell marginally during the month for the first time since December, with survey respondents linking this to non-replacement of departing staff. 

Mr McNamara added that despite subdued trading conditions, Irish manufacturers maintained an overall positive outlook regarding activity over the coming 12 months, with sentiment rising in September.