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Irish manufacturing output surged to a nearly five-year high in September, driven by strong domestic and export demand. However, the sector also faced significant cost increases, with input prices rising at the fastest rate since June. While companies managed to maintain margins by raising selling prices, optimism levels slipped due to global economic uncertainty.
Irish manufacturing output rose in September at its fastest pace in almost five years, AIB said on Thursday, amid expanding order books and rising demand for Irish exports.
Factory managers report steep cost increases
However, factory managers also reported the "steepest increase" in average costs since June, as fuel and transport prices continued to rise sharply. Based on a survey of more than 250 manufacturing businesses, the bank's latest purchasing managers' index for the sector rose marginally in September to 55.5 from 55.4 in August. Any reading above 50 signals overall growth, while a number below that points to contraction.
The headline index was buoyed by a surge in production volumes, with the sector's output rising to its highest level in four-and-a-half years. September was the second consecutive month in which output hit an almost five-year high.
"This was also reflected in a sharp rise in new orders, and an acceleration in export orders growth," said David McNamara, chief economist at AIB. Overall, the data pointed to improved domestic and overseas demand for Irish-made products, according to the report. Total new work expanded at "a robust pace" that was only slightly weaker than the 52-month high seen in August.
Export sales surge amid input cost pressures
AIB said that despite headwinds on the inflation front, export sales increased at the sharpest pace in three months. The rate of job creation in the sector also increased at a "solid pace", McNamara said, bolstered by a "healthy demand backdrop", which led to increased workloads. On a more negative note, input costs increased at their sharpest pace since June.
However, with demand still buoyant, many firms were able to recoup the additional costs by increasing selling prices and protecting margins, McNamara said. Optimism levels, while relatively high, also took a hit in September, according to the report.
"Around 38 per cent predict an increase in output over the next year, down from 49 per cent in August, while 11 per cent forecast a reduction," McNamara added. "Manufacturers cited global economic uncertainty as weighing on confidence. " After a subdued start to the year - due to price uncertainty and the US-Israeli war in Iran - Irish manufacturing has regained momentum in the second half of 2026.
Manufacturing output remains lower than last year
In the three months to the end of July, Irish manufacturing output increased by 2.7 per cent from the previous three-month stretch, according to the most recent Central Statistics Office data. However, production was around 4.1 per cent lower on an annual basis, reflecting a relative decline in activity a year after companies rushed to produce and export goods from Ireland to get ahead of US president Donald Trump's new tariff regime.
Irish Manufacturing AIB PMI Export Growth Input Costs Inflation Global Uncertainty
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