Sharpest fall in manufacturing activity in almost a year

June marked the sharpest decline in activity in the manufacturing sector in eleven months, according to the latest Purchasing Managers’ Index published by AIB.

The headline index fell to 47.4 in June from 49.8 May.

Any measure below the 50 breakeven point signals contraction in a sector.

The downturn was driven by a contraction in output and new orders, the report shows.

There was also a continuation of a decline backlogs of work.

“The Output Index has now been below the 50 mark for four months running, with the fall in factory production the fastest recorded since July 2023,” David McNamara, chief economist with AIB pointed out.

However, he noted that the Irish reading remained above the flash June reading for the Eurozone at 45.6, but far below the US and UK at 51.7 and 51.4, respectively.

“Respondents in June attributed the fall to reduced client activity. New orders fell at the second-fastest pace in 18 months,” Mr McNamara added.

New export orders came in below 50 for the fifth successive month as foreign demand remained subdued.

“Employment broadly stalled in June, but still remained just above the key 50 mark,” the report noted.

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“There were mixed responses from firms, with some reporting new recruitment, while others struggled to retain workers amidst lower production levels and the continued pattern of falling backlogs of work,” Mr McNamara explained.

Price pressures also increased in June with input price inflation accelerating again.

However, it remained below the historic average.

Output price inflation also accelerated as firms attempted to pass on higher input costs, largely related to increased labour costs.