New orders fall as demand in Irish manufacturing slows

Manufacturing output fell slightly in September, while new orders fell at the fastest rate since January 2021, according to AIB’s latest survey.

September marked the fourth straight monthly decline in new orders. According to the data, this was the longest string of consecutive monthly declines since mid-2019.

New export orders also fell for the fourth straight month.

This slowdown in orders was attributed to heightened customer caution due to the risk of an economic slowdown, higher purchase prices and geopolitical instability.

“New orders, including export orders, fell for the fourth straight month, a worrying sign of weaker demand amid mounting price pressures,” said AIB Chief Economist Oliver Mangan.

This was also reflected by the new orders to inventories ratio across the industry, which fell to its lowest level since May 2020 when Ireland was in lockdown.

Manufacturing output in Ireland also fell for the fourth straight month in September, but AIB stressed that the latest decline was weaker than the fall in new orders.

While new orders fell, companies turned their attention to clearing existing backlogs.

Incomplete work fell for the fifth straight month in September, and as a result, at the sharpest rate since January last year.

Employment in the industry also continued to rise.

“Manufacturers continued to work to clear backlogs and rebuild inventories of finished goods,” Mr Mangan said.

“As a result, companies were still hiring and employment was rising at its fastest rate in three months.”

Wholesale prices rose again last month due to the existing global shortage, the strong US dollar and high energy prices. The rate of increase slowed to a 19-month low. Despite this, Irish manufacturers reduced their purchasing volume in the past month.

Some companies also reported bulk buying to avoid future price hikes.

Pressures in the supply chain eased, but late delivery of previously ordered items contributed to a further increase in input costs, according to AIB data.

AIB also reported that the headline inflation rate across the sector fell to a 19-month low, a decline attributed to weaker demand and less pressure on the supply chain.

Ireland’s Purchasing Managers’ Index (PMI) edged up to 51.5 from 51.1 in August. Any reading above 50 is considered growth.

However, that was below Ireland’s long-term average PMI of 52.5.

September also recorded the second weakest growth rate since October 2020.

Ireland posted stronger performance in September compared to its Eurozone and UK counterparts.

Mr Mangan pointed to “much weaker readings” in the rest of Europe. Manufacturing PMIs were in contraction territory in both the eurozone and the UK at 48.5.

Last week, Eurostat figures showed that euro-zone wide inflation hit 10 percent for the first time in September.

Irish consumer prices rose 8.6 percent last month compared to 9 percent in August.

https://www.independent.ie/business/irish/new-orders-fall-as-demand-slows-in-irish-manufacturing-sector-42034315.html New orders fall as demand in Irish manufacturing slows

Fry Electronics Team

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