Ireland: Manufacturing PMI returns to expansionary territory in July
The AIB Ireland Manufacturing Purchasing Managers’ Index (PMI) rose to 50.1 in July from 47.4 in June. As a result, the index moved above the 50.0 no-change threshold and signaled an improvement in manufacturing-sector operating conditions compared to the previous month.
Central to the July improvement in the PMI were a renewed rise in production and tentative signs of recovery in demand conditions. Despite a continued decrease in new orders, the rate of decline moderated to a four-month low, indicating only a marginal fall. Additionally, employment growth in the manufacturing sector ticked up to a five-month high, with firms taking on permanent staff, which helped manage workloads and reduce backlogs of work at a faster rate than in previous months.
In terms of prices, July saw a notable quickening in the rate of input price inflation—the sharpest increase in 17 months—driven by higher costs for raw materials and transport. However, Irish manufacturing firms only slightly increased their selling prices, suggesting a willingness to absorb higher costs to remain competitive amid weak demand. Lastly, business confidence strengthened, reaching the highest level this year to date, with firms optimistic about demand conditions improving over the next 12 months.