Manufacturing downturn continues as weak demand hits production

The downturn in the manufacturing sector continued last month amid sliding levels of new business, the latest figures show.

Manufacturing output fell at its fastest pace for five months in April as businesses cut back production in response to weak demand.

AIB’s manufacturing purchasing managers’ index (PMI), published on Tuesday, showed activity slipped to 48.6 in April from 49.7 in March. Any reading below the 50 benchmark signals a decline in business on the previous month, while any result above that number indicates an increase.

It was the fourth month in the past six that activity in the sector deteriorated, according to AIB.

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While the bank said the fall was only marginal, excluding the impact of State curbs during the initial pandemic period, “the latest contraction was the joint strongest in a decade”.

Production cuts again weighed on manufacturing in April, with the latest decline in output the fastest since November, the bank said. The companies surveyed mainly blamed weak demand for the cuts, although some said material shortages were a problem.

New orders slid in April, although the decline was little changed from the previous month, according to AIB. Globally, weak demand hit new export orders, with this element of the index falling for the 11th month in a row.

Commenting on the figures, AIB chief economist Oliver Mangan said the index had fallen for two months following a rise to 51.3 in February.

“Thus the sector continues to struggle, as has been the case since last summer,” he said. “Irish manufacturing remained weighed down in April by ongoing weakness in orders and production, reflecting subdued demand conditions, including in overseas markets.”

He said the Irish fall was in line with international trends. April’s euro zone PMI was 45.5, while the UK dipped to 46.6, although the US picked up to 50.4.

Inflation eased in April, with the index recording its first fall in operating costs since June 2020, while selling prices increased at their slowest rate in 28 months.

Despite complaints about material shortages, supply trends improved last month, with delivery times shortening at the fastest rate since August 2009.

Employment grew for the fifth consecutive month but at a modest pace.

“Irish manufacturers remain optimistic about the future,” Mr Mangan said. This is the one area that has remained resolutely positive over the past six months despite more immediate challenges – with readings consistently above 60, and above 70 in February and March. However, Mr Mangan said there was a significant drop in levels of confidence this month.