AIB’s Manufacturing PMI for March recorded a sharp fall in activity levels, as the Covid-19 pandemic impacted supply and demand worldwide.
The bank's chief economist, Oliver Mangan (pictured), said that the findings were no surprise. “The headline index dropped to 45.1 from 51.2 in February, so it has moved well below the key 50 level that signals a shift into contraction territory.
"Further sharp falls in the PMI are likely over the next couple of months. The Irish index troughed below 35 during the last recession in 2008-09. New orders collapsed in March, falling by 14.1 points from February. This signals that further declines in output, which fell by a record 8.9 points in March, are on the cards. Indeed, expectations for output levels in 12 months’ time have fallen by 22.8 points in the past two months."
Mangan added that employment in manufacturing fell at its fastest pace since July 2009, while purchasing activity also declined at the quickest rate since September 2011. The March fall of 6.1 points was the largest on record since the AIB survey began in May 1998, surpassing the 5.7 point fall in February 2009, during the depths of the global financial crisis.
The new orders index contributed most to the March dive, falling a record 14.1 points, followed by output and employment respectively. Stocks of purchases had a broadly stable influence on the headline figure, while a record lengthening in suppliers’ delivery times had a positive impact.
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All new orders declined rapidly, both domestic and for export. The output index flopped a record 8.9 points, with manufacturers responding by shedding staff. The reduction in those at work was the fastest since July 2009, though not as severe as in late 2008 and the first half of 2009. Firms reported the layoffs as reflecting a lack of activity, new orders and cancelled projects.
Companies also reduced purchases of inputs at the sharpest rate since September 2011. The result has been the first reduction in average input prices paid by manufacturers since April 2016.
