Irish manufacturing sector sees 'sharp rise' in jobs

Survey respondents mostly cited improving domestic demand for improvement in manufacturing

In June, the AIB Irish Manufacturing PMI recorded a reading of 53.7, up from 52.6 in May. Any figure greater than 50.0 indicates overall improvement of the sector.

June saw the fastest overall improvement in the Irish manufacturing business conditions for just over three years as output and new orders grew and employment saw a “sharp rise”, the latest AIB Manufacturing Purchasing Managers’ Index (PMI) shows.

The PMI is a composite single-figure indicator of the manufacturing sector’s performance during the month. It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.

In June, the AIB Irish Manufacturing PMI recorded a reading of 53.7, up from 52.6 in May. Any figure greater than 50.0 indicates overall improvement of the sector.

The Irish manufacturing PMI remains above the flash June readings for the eurozone, US and UK at 49.4, 52.0 and 47.7, respectively.

Chief economist with AIB David McNamara said the June PMI showed “robust growth sustained” during the month, which was broad-based across output and new orders along with a “sharp rise in employment”.

"Output rose strongly in June due to a solid pipeline of new activity in the domestic economy. This was reflected in robust growth in new orders,” he said.

“Nonetheless, some respondents noted weaker UK demand, dragging down export orders, for a third consecutive month.” 

The PMI noted total new work for manufacturers increased for the sixth consecutive month in June and the rate of growth was only fractionally lower than in May.

Survey respondents mostly cited improving domestic demand while elevated global business uncertainty and subdued demand in major export markets contributed to another decline in new work from abroad.

In terms of employment, Mr McNamara said the pace of hiring hit a three-year high as firms reacted to rising workloads.

“Higher levels of employment were attributed to greater workloads, long-term business expansion plans and forthcoming new project starts. Backlogs of work nonetheless fell for the fourth consecutive month, thereby suggesting a lack of pressure on business capacity,” the PMI said.

The PMI also showed a deceleration in input price inflation, with the index easing to its lowest level since December last year.

Some of the firms surveyed cited lower energy prices as the key reason for the slowdown in input inflation.

However, despite this, output price inflation accelerated, as manufacturers passed on some cost increases and maintained margins.

The PMI said business activity expectations for the year ahead improved further from the low point seen in April, with confidence hitting a five-month high despite concerns about rising global economic uncertainty.

"Despite ongoing tariff uncertainty, Irish manufacturers maintained a broadly positive assessment of the outlook for activity levels over the coming year. Around 44% of the respondents predict a rise in output levels during the year ahead, while 8% expect a decline,” Mr McNamara said.

Optimism was mostly linked to new business initiatives and greater investment spending, although some firms still noted US tariffs and elevated global economic uncertainty had the potential to adversely affect business performance.