Irish manufacturing activity increased at its slowest pace in 10 months in October, as output and new orders lost momentum, according to new data.
The AIB Ireland Manufacturing Purchasing Managers Index (PMI) dipped to 50.9 in August from 51.8 recorded the previous month, according to the bank. Any figure greater than 50 indicates overall improvement in the sector.
Production volumes largely stagnated across the Irish manufacturing sector, marking the end of nine months of sustained expansion amid subdued demand growth, the bank said.
AIB chief economist David McNamara said there was a “continued fall in export orders” despite a marginal growth in overall demand. He pointed to anecdotal evidence from respondents to the PMI that “weakness in European export markets” was the key driver of the fall in orders.
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A subindex measuring the movement of new export orders remained below the neutral 50 mark for the third month running and showed the sharpest pace of contraction
“Encouragingly, employment continued to expand, extending the current period of growth to 11 months,” he said, but noted that skills shortages were holding back hiring in the sector.
Input price inflation, which has been consistently slowing in 2025, hit its lowest rate for 17 months in October. This was driven by lower raw material prices. Average prices charged by manufacturers slowed, the bank said, despite efforts to pass on higher staff wages and energy bills.
Meanwhile, delivery times lengthened for the sixth month in a row which purchasing managers linked to delays with transportation and logistical bottlenecks – especially with imported items.
The slower growth in demand led to increased competition for new business, while respondents indicated they were seeking to improve cash flow and working capital efficiency amid the sectoral conditions.
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Despite more challenging market conditions in the sector, manufacturers remained optimistic about the year ahead.
While the degree of confidence slipped to its lowest since July, more than 45 per cent of companies surveyed anticipate an expansion of production volumes over the coming year, with just 9 per cent projecting a reduction.
New product launches and plans to enter new overseas markets were cited as sources of sectoral confidence, alongside hopes of improvements in global demand conditions.
The Irish sector has outperformed other regional measures. While the US saw positive manufacturing growth, both the UK and the euro zone saw their manufacturing activity decrease significantly.
The AIB Ireland Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 250 manufacturers.
