Confidence in Irish manufacturing sector improves as new orders increase

The Irish manufacturing sector regained some momentum in November, as business confidence improved and new orders and output both returned to growth.

In November, the AIB Ireland Manufacturing PMI index rose to 52.2 from 50.3 in October, the third highest reading since April 2019. The figure is derived from indicators for new orders, output, employment, suppliers' delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of the sector.

Oliver Mangan, chief economist with AIB, said that the reading was “impressive” given that the Irish, as well as some other European economies, were back in lockdown in November.

“Overall, the November PMI data shows that, as in other countries, the sector is coping well with the second lockdown and is increasingly confident about prospects for 2021”.

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All five components of the PMI rose in November and all were in positive growth territory above 50. New orders increased in the month, which translated into a rise in production. The growth in orders, though, was modest so outstanding backlogs continued to decline.

“Very encouragingly, employment rose for a second consecutive month, with the pace of job creation the joint-strongest since June 2019,” Mr Mangan said.

Against a background of the Covid-19 pandemic, the survey found that supply chains remained under pressure, with manufacturers reporting difficulties in sourcing inputs and delays in deliveries.

“Price pressures are also rising, with the strongest increases registered in both input and output prices since early 2019,” Mr Mangan said.