Last month, data indicated a continued instability within the manufacturing industry, marking the industry’s lowest optimism levels since 2020. This was attributed to weak demand both from home and international markets. Statistics revealed by AIB Ireland Manufacturing PMI for March demonstrate a reversion to contraction in both output and new orders, with a notable slump regarding the anticipated growth for the upcoming year.
However, it wasn’t all gloom. A moderate level of job creation was maintained by manufacturers, and supplier performance experienced its most substantial improvement in nine months.
March saw the AIB Ireland Manufacturing PMI drop to 49.6 from 52.2 in February. Deteriorating manufacture conditions have been reflected in three of the previous four months, but the current downturn is relatively slight.
New orders, output, employment, suppliers’ delivery duration and purchased inventory stocks are factors contributing to the headline PMI figure. Any figure below 50 illustrates a contraction.
Renewed contraction was signalled by March figures in production volumes as well as new incoming work. Production schedule cutbacks in response to unsatisfactory demand conditions and below par sales forecasts were frequently mentioned by those surveyed, according to AIB.
The survey showed a sizeable drop in new orders from overseas, the quickest since June. Challenging global economic scenarios and muted demand from UK-based clients were mostly blamed by goods producers.
Nevertheless, a moderate surge in staffing numbers throughout the manufacturing sector was indicated by the survey, counter to a setback in new order books in March. An uplift in employment has been recorded for three successive months, predominantly due to long-term growth plans and new product releases.
Yet, recruitment pace slightly dipped from February, as several companies pointed out weaker demand as a deterrent. Additional hiring helped in easing capacity strain in March, leading to a modest decrease in pending work in the manufacturing industry, a trend that’s been consistent since May 2022.
Inventories underwent attempts at streamlining by goods producers amidst concerns over Red Sea shipping delay impacts on supplier performance. A slight increase in buying activities was witnessed in March, even though pre-production stocks saw depletion for the sixth month in a row.
Finished goods stocks also witnessed reduction in March, albeit with the slowest rate in the past six months.
The original text indicates that logistical delays negatively impacted supplier performance for manufacturers, but this was counterbalanced by increased availability of raw materials and reduced demand. As a result of these factors, the most recent data reveals that, for the first time in a quarter, sellers’ response times decreased to the largest degree since June 2023.
Rising transport expenses, increasing cost of goods, and heightened salary pressures were among the factors that led to a significant surge in overall cost loads for production companies. The rate of cost inflation for resources rose for the second successive month, marking its highest increase since February 2023.
In the meantime, price inflation at the point of production reached a near-year high as manufacturers attempted to transfer the escalating procurement costs to their customers.