Manufacturing output growth rebounded to its highest since July last month, supported by a rise in new work and additional staff recruitment, according to data from AIB.
The bank’s latest PMI pulse check of the sector said exports markets were a source of order book expansion in February as total new business from abroad improved for the first time in three months and to the greatest extent since March last year.
Goods producers nonetheless faced challenges from supply chain delays and rising purchasing prices, with the rate of cost inflation hitting a 37-month high, the report said.
The headline PMI figure is an indicator of performance in the sector, and is derived from indicators across a range of factors and challenges facing manufacturers. Any figure greater than 50 indicates overall improvement of the sector, while any figure below signifies contraction.
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At 53.1 in February, up from 52.2 in January, the rate reached its highest level since July and signalled a “solid improvement” in overall business conditions across the sector.
This was supported by stronger rises in output, new work and employment, while a slight decline in stocks of purchases was the only component weighing on the headline index.
Higher volumes of manufacturing production have been recorded since November and the latest upturn was the strongest for seven months. Survey respondents widely commented on greater output requirements due to improved demand conditions, especially across global markets.
Total new orders expanded modestly in February as the rate of growth picked up from January’s five-month low. This was driven by a renewed upturn in export sales, with the latest survey indicating the fastest rise in new business from abroad since March last year.
Manufacturers often noted improved order intakes from clients in Asia, the UK and US, despite reports of intense competitive pressures and difficulties arising from elevated cost inflation.
Greater workloads spurred efforts to boost production capacity in February, which contributed to another marked increase in employment numbers.
Moreover, the pace of job creation was the strongest since June 2022. Backlogs of work meanwhile decreased for the third month running, albeit at only a marginal pace. Some manufacturers noted that supply chain delays had limited their scope to reduce “unfinished business”.
February data indicated that vendor performance deteriorated for the tenth month running. The degree to which delivery times lengthened was the greatest since November 2022. Shipping delays, depleted inventories and shortages of staff at suppliers were all reported during the month.
Goods producers recorded a “solid increase” in their input buying, with the pace of expansion unchanged from January’s seven-month high.
However, there was a renewed decline in stocks of purchases. Some firms suggested that supply chain delays had led to an “unexpected reduction in inventories”.
Purchasing prices continued to rise sharply in February. The overall pace of input cost inflation accelerated to its fastest since the start of 2023.
Manufacturers typically cited rising copper, steel and precious metals prices, as well as the impact of elevated energy costs. However, factory gate charged increased at only a moderate pace that was weaker than that seen in January.
Looking ahead, around 46 per cent of the survey panel predict an expansion of production volumes over the year ahead, compared to only 7 per cent that anticipate a decline.
The resulting index pointed to a strong degree of business optimism, albeit less upbeat than at the start of 2026. Manufacturers suggested that forecasts of improving customer demand and planned expansion in export markets had underpinned business confidence in February.
