Manufacturing sector rebounds as firms optimistic about prospects

Ireland’s manufacturing sector bounced back last month with improvements in orders, output, and new jobs.

The AIB purchasing managers index for January rose from 49.5 in December to 51.4 in January, its highest reading since April 2019 and the first reading above the 50 mark since October last.

A reading above 50 indicates growth, while a number below that points to contraction in the sector.

New orders rose for the third time in four months in January and at the fastest rate since last April.

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Production jumped for only the third time in the past nine months, while employment bounced back following a two-month spell of job shedding.

The report finds manufacturers supported workloads by expanding their purchasing operations.

The volume of inputs ordered posted the first meaningful rise since last April, although the rate growth was slower than that for new work.

Input price inflation slowed to a 42-month low.

In contrast, output prices increased at the strongest rate since March 2019, pointing to improving profitability.

“Irish manufacturing enjoyed a positive start to 2020.

Furthermore, firms believe that the prospects for the coming year are also improving," said AIB chief economist Oliver Mangan.

However, he noted that difficult EU-UK trade talks this year could test this greater optimism, “as may the continuing subdued growth prospects for the global economy”.