Irish manufacturing growth resumed an easing trend in February, according to the latest PMI survey data from AIB.
Output and employment rose at the softest rates for 11 and 12 months, respectively. More encouragingly, new order growth showed more resilience, and backlogs increased at the third-strongest pace on record as supply and labour shortages constrained output.
Meanwhile, input and output price inflation accelerated to the third- and second-fastest rates on record.
The PMI eased to 57.8 in February, from 59.4 in January, signalling the slowest overall improvement in manufacturing business conditions since March 2021. Aside from gains last October and in January, the PMI has trended lower since hitting a record high of 64.1 last May.
The downward movement of 1.6 points in the headline figure was reflected in all five component sub-indices. The biggest negative influence came from suppliers' delivery times (-0.5), which is inverted in the PMI calculation, followed by stocks of purchases (-0.4), output (-0.3), employment (-0.2) and new orders (-0.2).
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February survey data highlighted another strong increase in manufacturing production, extending the current sequence of expansion that started in March 2021. Although the rate of growth remained faster than the long-run survey average, it was the weakest in nearly a year.
The 12-month outlook for output growth remained relatively strong, as new orders continued to rise sharply in February, with the rate of growth easing only marginally since January and outpacing production for the second successive month. Companies linked demand to less COVID restrictions, new customers and exports. New export business rose at a rate little-changed on January's four-month high.
Employment also showed a weaker growth rate in February, with the rate of job creation slowed for the third time in four months to a 12-month low, although it remained above the long-run survey average.
Survey data signalled an intensification of price pressures in February. Both input and output price inflation accelerated and were the third- and second-fastest on record, respectively. Firms widely reported cost pressures driven by raw materials, electronic components, energy, transportation, packaging and UK customs.
Commenting on the report, Oliver Mangan, AIB Chief Economist, said: "The AIB Irish Manufacturing PMI for February shows continuing strong growth in the sector. While the headline index did fall back to 57.8 from 59.4 in January, hitting an eleven month low, this is still an elevated level historically.
"The Irish PMI is also very much on a par with the impressive flash February readings for the Eurozone, UK and US of 58.4, 57.3 and 57.5, respectively.
"The subcomponents of the Irish PMI survey also continued to register strong readings. There was another significant increase in manufacturing production, though the rate of growth is slowing. There was also a further marked rise in new orders, as markets re-opened with the removal of COVID restrictions.
"Employment in the sector continued to grow, albeit at its slowest pace in a year as firms referenced recruitment difficulties owing to labour shortages.
"The combination of strong demand, disruptions to supply chains, Brexit and continuing upward trend in prices of raw materials, energy and transportation, meant the pressure on costs remained very intense. Indeed, the rate of increase in both input and output prices reaccelerated to near record levels in February."
