Irish manufacturing sector sees biggest orders slump in 16 months

New business orders in manufacturing slid to a 16-month low in April, compounding a sector-wide decline, according to the most up-to-date barometer of the sector.

AIB’s latest Purchasing Managers’ Index (PMI) for the manufacturing sector here pointed to a “sustained reduction in output volumes and incoming new work during April, with both rates of decline accelerating since the previous survey period”.

The decline in new business orders was linked to a sharp fall in export sales.

The PMI collates several industry measures into a single index. Anything below 50 signals the sector is contracting. As a so-called leading indicator for the health of the economy it is closely monitored.

AIB’s headline index for April fell to 47.6, down 49.6 in March and below the neutral 50-point threshold for the fourth time in the past five months.

Survey respondents signalled “a considerable loss of momentum” for new orders.

Total new work also decreased at the fastest pace since December 2022 on the back of “shrinking sales in both domestic and export markets”. The latest drop in new orders from abroad was attributed to “unfavourable business conditions” in the UK and elsewhere in Europe.

Weaker demand translated into weaker employment numbers, ending a three-month period of marginal jobs growth.

On the upside weaker price pressures internationally driven by falling oil prices saw cost inflation fall to a three-month low. Some respondents said reduced raw material costs had helped to limit the overall rate of inflation.

“The fall in April was the sharpest rate of decline since July 2023 and aligns with broader declines observed across other European PMI surveys last month,” AIB’s chief economist David McNamara said.

“This decline in the headline index reflects underlying weakness in output, new orders, and hiring trends in the sector last month,” he said, noting the Irish PMI remains above the flash April reading for the euro zone at 45.6 but below the US and UK at 49.9 and 48.7 respectively.

“A generally weaker demand environment was cited, including from clients in the construction sector,” he said.

Mr McNamara also noted that vendor delivery times lengthened in April, with the ongoing Red Sea shipping diversions a source of disruption to supply chains.