Manufacturing sector contracts due to new order weakness
5 Pmi In Sector Figure Down At For Sector Indicates A The The Contraction The Latest Reading 9 From 50 Within Stood Below 49 Manufacturing — October 51 Any
Despite an uptick in output during November, the Irish manufacturing sector saw a slight contraction during the month on the back of weak new orders and a drop in employment numbers, the latest AIB Purchasing Managers Index shows.
The latest PMI reading stood at 49.9 — down from 51.5 in October. Any figure below 50 indicates a contraction within the sector.
According to AIB, Irish manufacturers indicated a sustained rebound in production volumes during November, with output growth edging up to its highest since February.
However, there were signs of fragility as new orders returned to contraction and employment numbers decreased for the third month running.
Chief economist at AIB, David McNamara said the sector “lost momentum” during the month, marking the third time in the last six months the PMI has dropped below 50, citing weakness in new orders which contracted at their sharpest pace since June.
"While the headline index fell in November, output rose in the month for the second consecutive month and at the fastest pace since February. Some respondents noted inventory rebuilding had helped to underpin the rise in production volumes,” Mr McNamara said.
“However, as mentioned previously, new orders fell back into contractionary territory, after expanding for the first time since February last month, with firms attributing the weakness to fragile consumer demand and subdued activity from the main export markets."
Goods producers widely commented on the lacklustre customer demand and less favourable global economic conditions.
The subdued demand contributed to a reduction in staffing numbers for the third month straight. Although only marginal, the rate of job shedding was the fastest recorded since June 2023.
Mr McNamara pointed out that despite the slight contraction, the Irish manufacturing PMI remained above the flash November readings for the eurozone, US, and UK at 45.2, 48.8 and 48.6, respectively.
The PMI is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.