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Manufacturing growth slower, but still strong

Growth in the manufacturing sector of the Irish economy slowed in February for the first time in almost a year, according to the monthly purchasing managers’ index (PMI) from AIB Ireland.

The index, compiled by research group IHS Markit, came in at 57.8 – down from 59.4 in January, and the lowest figure since March last year. This is, however, still well above the 50 level that signals growth.

Firms reported that price pressures remained “very intense”, according to AIB chief economist Oliver Mangan.

Staff shortages

Production growth remained strong, but slowed as companies reported that supply chain problems, and high levels of staff absence due to COVID-19, impacted their activity.

The report noted that growth in new orders eased only marginally, helped by the easing of COVID restrictions and continuing buoyant export business.

The rate of employment growth slowed for the third time in four months but remained above the survey’s long-run average level. Some firms reported difficulty filling vacancies, due to a lack of suitable candidates.

‘Very positive’ outlook

Both input and output price inflation accelerated and were the third- and second-fastest on record, respectively, according to the report.

"The combination of strong demand, disruptions to supply chains, Brexit and continuing upward trend in prices of raw materials, energy and transportation, meant the pressure on costs remained very intense,” said Mangan.

The economist stressed, however, that firms remained “very positive” on the 12-month outlook for production.

“Customer demand is expected to continue strengthening with the ending of COVID restrictions,” he said.