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Ireland's manufacturing sector saw a steep slowdown in growth in May, data from S&P Global and AIB showed Wednesday.
The headline AIB Ireland manufacturing purchasing managers' index declined to 56.4 points in May from 59.1 in April. Despite remaining above the no-change 50.0 mark, May's figure is the slowest rate of improvement since February 2021.
AIB noted higher prices were to blame, damping client demand.
‘Production was also weighed on by ongoing supply issues which pushed input price inflation to a near-record high in May,’ AIB added.
Oliver Mangan, AIB chief economist, said: May's data showed a ‘clear easing’ of momentum.
‘The easing in the pace of expansion reflects slower growth in output and particularly new orders, with some respondents saying that rising prices are weighing on demand. Notably though, continuing pressure on workloads saw employment increase markedly at the fourth-quickest pace on record,’ he continued.
Backlogs fell for the first time in a year, owing to order growth stalling.
‘Furthermore, the fall in stocks of finished goods was only marginal and the slowest since last September, while inventories of inputs rose at their fastest pace in four months,’ Mangan said. ‘Firms also reported that, although delivery times for input supplies continued to lengthen appreciably, it was the least pronounced rise since December 2020.’
Sentiment among factory owners remains positive, AIB noted, but was at its lowest point since the end of 2020 - with concerns about rising inflation and the war in Ukraine often cited.
‘In this regard, input prices rose at their second-fastest pace on record, with marked increases in raw materials, energy and fuel costs. Faced with surging input prices, manufacturers raised their own prices by a survey-record degree for a third successive month,’ Mangan said.
The PMI is collected from responses to questionnaires sent to purchasing managers in a panel of around 250 manufacturers in Ireland. The data was collected from May 14 to 24.
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