Ireland Manufacturing Growth Hits Three-Year High as Orders Strengthen

reland’s manufacturing sector accelerated in September, with production recording its strongest growth in more than three years as demand remained firm across domestic and international markets, according to a business survey released on Thursday.

The AIB Ireland Manufacturing Purchasing Managers’ Index, compiled by S&P Global, rose to 55.5 in September from 55.4 in August. A reading above 50 indicates growth, while a figure below that level signals contraction.

The survey showed that manufacturing output increased at its fastest pace since March 2022, supported by continued strength in companies’ order books.

“Output rose rapidly in September, increasing to the highest level since March 2022, with respondents citing continued robust order books,” said David McNamara, chief economist at AIB.

New orders increased for the 21st consecutive month, although the pace of growth eased slightly from August, when the index reached its highest level in 52 months.

Demand from overseas markets also strengthened during September. The seasonally adjusted New Export Orders Index rose to its highest level since June, with companies reporting stronger inflows of new business from major developed economies.

The continued rise in orders helped support production, but it also placed additional pressure on manufacturing capacity. Purchasing activity increased at its fastest pace since May, while outstanding work accumulated for a third consecutive month.

Employment growth, however, remained unchanged from August, when it had slowed to a seven-month low.

The survey also pointed to increasing cost pressures across the manufacturing industry. Input price inflation accelerated to its highest level since June, while inflation in prices charged by manufacturers reached a three-month high.

Companies attributed higher input costs to increases in energy, fuel and transport prices. Rising operating expenses could put pressure on manufacturers’ margins if companies are unable to pass the additional costs on to customers.

The September figures suggest that Ireland’s manufacturing sector continued to expand despite the increase in production costs. The sustained growth in new orders, including export demand, provided support for output during the month.

The rise in the headline PMI was relatively modest, increasing by 0.1 point from August, but the stronger production reading highlighted the pace of activity among manufacturers.

The latest survey also showed that the sector entered the final quarter of the year with a substantial pipeline of work. However, the accumulation of backlogs and rising input costs could create challenges for businesses if capacity constraints and inflationary pressures persist.

The PMI survey is closely watched as an early indicator of economic activity in Ireland’s manufacturing sector, providing an assessment of output, orders, employment, purchasing activity and prices before official economic data are released.