October recorded the first improvement in Irish manufacturing business conditions since May, according to the  manufacturing PMI from AIB.

Output grew, new orders were up, and employment increased, but inflows of new business from abroad declined for the fourth month in a row. Despite the continued uncertainty over Brexit during October, sentiment regarding output over the coming year improved slightly from September's record low. 

Chief economist Oliver Mangan (pictured) commented: "The index reading of 50.7 was the highest since April and well up from its level of 48.7 in September. Encouragingly, most of the sub-components of the survey saw an improvement after a string of weak readings over the third quarter. 

"Output and new orders both returned to growth territory, having contracted in recent months. Their rate of growth, however, was only marginal. Furthermore, new export orders continued to fall, though the pace of contraction slowed. Meanwhile, sentiment among Irish manufacturers regarding future output recovered in October after falling sharply in September. 

"Lower demand from the UK due to Brexit uncertainty was cited as a reason for the continued weakness of export orders. Stock of finished goods continued to rise on concerns that Brexit might impact production. Stocks of raw materials and other inputs also rose on worries about potential supply disruptions if Brexit had gone ahead as scheduled. In particular, there was an increase in the purchase of supplies from the UK. 

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"Overall, while the improvement in the manufacturing PMI in October is welcome, it remains at a weak level, consistent with very modest growth in the sector as the slowdown in the global economy and Brexit uncertainty continue to act as headwinds." 

Employment improved from September's stagnation, rising modestly during October, and the rate of job creation was the fastest since June. 

Input costs increased, fuelled by higher raw material prices, particularly for meat and other food products. In response to higher input costs, Irish manufacturers increased their selling prices for the first time in four months.

The AIB Manufacturing PMI for October is available here.