The latest Purchasing Managers’ Index (PMI) from AIB for the manufacturing sector has suggested that there was a “continued decline in produced quantities and incoming new business throughout April, with both declining rates worsening since the previous survey period.” In a summary of several industry indicators, the PMI painted an overall picture of the sector, signifying contraction when scores are below 50. It is a key pointer of the economic health and is kept under close watch.
The main AIB index for April declined to 47.6, dropping from 49.6 in March and falling beneath the neutral 50-point mark for the fourth time in the previous five months. A “significant slowdown” in new orders was reported by the survey participants. Added to that, total new business saw its fastest decline since December 2022 due to “shrinking sales in both local and foreign markets”. This recent decline in international new orders was connected to “challenging business environments” in the United Kingdom and other European regions.
Decreased demand consequently weakened employment numbers, putting an end to a three-month trend of marginal job growth. Positively, international price pressures eased due to a decrease in oil prices, leading to cost inflation hitting a three-month low. A few participants mentioned that reduced costs of raw materials contributed to restraining the overall inflation rate.
David McNamara, AIB’s chief economist, stated that “the decline in April was the steepest rate of decline since July 2023 and corresponds with wider declines witnessed in other European PMI surveys the previous month.” “This contraction in the headline index mirrors the underlying frailty in production, new orders, and recruitment patterns in the sector last month,” he noted, mentioning that the Irish PMI stays above the flash April reading for the euro zone at 45.6 but is below the US and UK’s 49.9 and 48.7 respectively.
“General weaker demand was cited, including from clients in the building industry,” he added. McNamara also highlighted the prolonging delivery times in April, with Red Sea shipping diversions causing supply chain disruptions.