Manufacturing sector continues to grow, AIB PMI reveals
The manufacturing sector continued to grow in January, according to the latest AIB Purchasing Managers Index (PMI).
The headline index picked up to 59.4 in January, from December’s nine-month low of 58.3.
Readings above 50 indicate overall rises in activity.
The index remains at an elevated level historically, with the January reading higher than in any month prior to April 2021.
The Irish reading is on a par with the flash January index for the euro zone, which picked up from 58 to 59, and above the flash indices for the UK and US of 56.9 and 55, respectively.
Oliver Mangan, AIB’s chief economist, said the subcomponents of the Irish PMI survey registered strong readings.
“The most encouraging aspect was a marked rise in new orders, including for exports,” he said.
“Growth in output, though, while remaining strong was constrained by staffing problems, often due to absences linked to Covid. However, overall employment in the sector continued to grow at a very solid pace,” he added.
The PMI reveals that demand for Irish manufactured goods rose for the eleventh month in a row in January – and the rate of growth accelerated to the fastest since last September, partly linked to new customers.
Export demand also improved following subdued increases throughout the final quarter of 2021.
Although new business inflows quickened in January, the PMI reveals that manufacturing output failed to keep pace due to ongoing material and staff shortages.
Production rose for the eleventh month running – albeit at the weakest rate since last March.
“Not surprisingly, with orders picking up but constraints on production, backlogs of unfinished work continued to rise sharply,” Mr Mangan said.
“Firms responded with another marked rundown in their inventories of finished goods. “Meanwhile, the delivery times for inputs also lengthened again, reflecting the ongoing pressure on supply chains,” he added.
According to the PMI, the combination of strong demand, disruptions to supply chains and continuing upward trend in prices of raw materials, energy and transportation, meant the pressure on costs remained intense.
“There were further marked rises in firms input and output prices, though the rate of increase has eased somewhat recently,” Mr Mangan said.