|Source: Markit Economics|
Irish Manufacturing PMI data for August pointed to further declines in output and new orders in the Irish manufacturing sector. Furthermore, staffing levels contracted at a record rate as firms adjusted capacity to falling workloads. Input prices increased at a substantial pace, albeit one well below July’s high.
At 44.9, the seasonally adjusted NCB Purchasing Managers’ Index (PMI) – an indicator designed to provide a single figure measure of the health of the manufacturing industry – continued to signal a marked rate of contraction, albeit weaker than July’s record. The PMI has registered a lower reading on only three other occasions in the ten-year survey history.
Employment in the Irish manufacturing sector contracted for the ninth successive month in August, with firms widely reporting that falling workloads had led to lower staffing requirements. The rate of contraction of employee numbers accelerated, as it has done in each month since March, and was the sharpest in the survey history.
Irish manufacturers registered a marked contraction of new business in August, as firms noted a further deterioration in demand conditions, both domestically and abroad. Overall new business has now declined for six months running. New work from abroad also fell, with the strength of the euro continuing to adversely affect demand.
In response to smaller workloads, production contracted at manufacturers in August. Output has fallen in each month since March, although the latest decline was the weakest in that period.
In August, manufacturers’ backlogs of work fell at a substantial rate that was the second-sharpest in the six-year series history. Panellists indicated that the decline in new business had led to the clearance of backlogs. Firms also reported that finished goods stocks had been utilised to complete outstanding orders.
Manufacturers registered the sharpest shortening of supplier delivery times in the survey history in August. The marked improvement in vendor performance reflected reduced pressure on capacity as demand for inputs continued to fall.
Prices paid for inputs increased substantially, albeit at a markedly weaker rate than July’s record. Firms widely reported higher energy and metals costs. Prices charged increased at a robust pace as firms tried to protect margins in response to rising input costs.