Manufacturing rebounds in March from weakstart

AIB's Oliver Mangan

Ellie Donnelly Twitter Email

April 01 2021 02:30 AM

Ireland’s manufacturing sector rebounded in March as output, new orders and exports all rose for the first time since the end of last year.

The latest AIB Manufacturing Purchasing Managers Index (PMI) showed the 12-month outlook for production improved and that jobs were added at the fastest rate in two-and-a-half years.

The PMI is designed to give a single-figure indicator of manufacturing performance. The data includes information around new orders, output, employment, suppliers’ delivery times and stocks of purchases.

The PMI surged to 57.1 in March, from 52 in February, signalling a marked overall improvement in manufacturing business conditions at the end of the first quarter. Any reading over 50 indicates growth.

The month-on-month increase in the headline figure of 5.1 points was the third largest on record, behind only those registered in June and July last year as the sector rebounded from the first Covid-19 lockdown.

The improved manufacturing performance mainly reflected much stronger contributions from the new orders and output components, which had been firmly in contraction territory in the first two months of this year.

The data indicated improving export demand in March, with the growth of new work from abroad the second-fastest since September 2018. Firms reported improving demand from Europe and the United States.

"The sub-components of the Irish PMI survey all point to a big improvement in business conditions in the sector,” said AIB chief economist Oliver Mangan.

“Output returned to a strong growth path after contracting in the previous two months, driven by a marked pick-up in orders, including from abroad, as demand strengthened.”

Employment in the sector expanded for the sixth month running, and at the fastest rate for two-and-a-half years. Businesses linked hiring activity to rising workloads and improving forecasts.

However, pressure on supply chains remained severe, according to the PMI. Average delivery times for inputs lengthened again, with the first three months of 2021 seeing longer delays than in any other period in the near 23-year survey history except for April last year during the first lockdown.

Firms linked longer delivery times to Brexit customs checks, global shortages of raw materials and shipping bottlenecks.

These caused average input costs increased at the fastest rate in ten years and firms passed these rises on to customers.