The State’s manufacturing sector improved at its fastest rate in more than three years last month, new data from AIB show.
The bank said the sector enjoyed an accelerated pace of job creation and renewed stock building, alongside “robust yet slightly slower rates” of production and new order growth.
Strengthening business conditions contributed to the steepest rise in input buying since April 2022.
Meanwhile, business activity expectations for the year ahead improved further from the low point seen in April, with confidence hitting a five-month high despite concerns about rising global economic uncertainty.
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AIB’s headline PMI figure, which is derived from indicators for new orders, output, employment, suppliers’ delivery times, and stocks of purchases, climbed to 53.7 from 52.6 in May. Any figure greater than 50 indicates overall improvement of the sector.
June was the sixth month in a row that the sector registered an improvement in conditions. Moreover, the latest reading was the highest since May 2022 and signalled “a solid rate of expansion”, AIB said.
Faster job creation, a rebound in stocks of purchases and longer lead times for supplier deliveries all boosted the headline figure, which offset slight slowdowns in both output and new business growth.
June data signalled a strong rise in production volumes, but the rate of expansion eased further from April’s three-year high. Irish manufacturers mostly commented on an uplift to production schedules in response to rising demand and strong sales pipelines.
Total new work increased for the sixth consecutive month and the rate of growth was only fractionally lower than in May. Survey respondents mostly cited improving domestic demand.
Meanwhile, elevated global business uncertainty and subdued demand in big export markets contributed to another decline in new work from abroad. However, the rate of contraction eased considerably since the previous survey period.
Manufacturing companies stepped up their staff hiring, with the rate of job creation accelerating for the third month running to its strongest since June 2022.
Higher levels of employment were attributed to greater workloads, long-term business expansion plans and forthcoming new project starts. Backlogs of work nonetheless fell for the fourth consecutive month, “thereby suggesting a lack of pressure on business capacity”.
Rising demand and efforts to rebuild inventories contributed to a sharp increase in purchasing activity.
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The latest expansion of input buying was the strongest since April 2022. Stocks of purchases rose for the first time in 10 months.
Stock building “partly reflected efforts to mitigate lengthening delivery times” from vendors, AIB said. However, supplier delays were the most widespread since January amid reports of worsening transportation availability.
Despite strengthening demand for manufacturing items and less favourable supply conditions, the latest survey indicated a further slowdown in input cost inflation.
Purchasing prices increased at the weakest pace since December. Efforts to alleviate squeezed margins nonetheless meant that factory gate charges rose to the greatest extent for four months.
Looking ahead, manufacturers remained optimistic about their growth prospects over the next 12 months. Around 44 per cent predicted a rise in production volumes, while only 8 per cent anticipated a decline.
