Ireland's manufacturers report stronger output and new export orders

(Alliance News) - Ireland's manufacturing growth accelerated in May, despite firms having to contend with greater inflationary pressures and increased lead times among vendors, S&P Global reported Tuesday.

The AIB Ireland manufacturing purchasing managers' index posted the highest reading in four years, rising to 55.9 points in May from 54.9 in April.

A reading above the 50-point neutral mark indicates an overall increase in month-on-month business activity, while a reading below signals a contraction.

David McNamara, AIB chief economist, said: "The expansion in May was due to sustained gains in output and new export orders, reflecting a frontloading of demand and stock building due to the Middle East conflict.

"Output rose solidly in May, at the fastest pace in 12 months, with respondents citing strong order books. This was also evident in the surge in new orders and export orders to multiyear highs, as firms reported a boost to sales despite the geopolitical uncertainty. Firms cited improving demand from the UK, US and Asia."

Production volumes grew for the seventh month in a row and S&P Global said the increase in total new work from abroad was the steepest seen since August 2021.

Average lead times among vendors lengthened, in part due to shipping delays and raw material shortages.

Job creation in the manufacturing sector was the strongest in almost four years.

58% of survey respondents reported an increase in purchasing costs during May, versus only 1% reporting a decline.

"This pointed to the strongest pace of input cost inflation since July 2022, which was mainly attributed to higher fuel and raw material prices. Efforts to pass on higher input costs to clients led to the strongest rate of factory gate price inflation since December 2022," S&P Global explained.

Such inflationary pressures and broader supply chain challenges brought about by the conflict in the Middle East have weighed on the business outlook for the next 12 months in Ireland's manufacturing sector.

However, business activity expectations were up from a 25-month low in April and reached the highest level since February. Citing "anecdotal evidence", S&P Global said this optimism was supported by improving sales pipelines, planned expansion into new export markets and investments in plant capacity.

S&P Global compiles the PMI each month using survey responses from a panel of around 250 manufacturers.

By Elijah Dale, Alliance News senior reporter Asia-Pacific

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