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Irish manufacturing firms recorded their fastest order growth in four and a half years in August, pushing sector sentiment to its highest level since January. The AIB purchasing managers' index reached 55.4, supported by strong domestic demand, although export orders grew more slowly amid uncertainty linked to the war in the Middle East.
Sentiment among manufacturing businesses rose to its highest level last month since January, driven by a strong surge in new orders across the sector. According to the latest purchasing managers' index compiled by AIB, Irish manufacturing firms recorded their fastest rate of order growth in four and a half years during August, signalling renewed confidence and resilience despite a challenging international backdrop.
The headline index reached 55.4, up by 0.3 points from July, marking the tenth consecutive month of expanded output as producers responded to rising demand by boosting production levels. Any figure above 50 signals growth in the sector, while a number below that threshold points to contraction. The report is based on a survey of more than 250 manufacturing businesses operating across Ireland.
However, the sharp rise in new business was accompanied by only a modest increase in export orders, which grew at a much weaker pace than total new business. Firms attributed the subdued international demand to ongoing uncertainty caused by the war in the Middle East, which has created hesitancy among overseas buyers. Irish manufacturers also reported another month of significant supply chain disruption stemming from the conflict, with transportation delays lengthening purchasing lead times.
Some panellists noted that these delays were directly linked to the war, while others pointed to general capacity constraints across supply chains as a contributing factor to operational challenges. Alongside supply chain pressures, factories faced another sharp rise in input costs during August, particularly for fuel, transportation and energy. Despite these cost pressures, robust demand allowed many firms to increase selling prices and protect margins, although output price inflation eased to a five-month low.
AIB chief economist David McNamara noted that Irish manufacturers' assessment of the outlook for activity levels over the coming year remains broadly optimistic. Around half of those surveyed predict an increase in output over the next year, while only seven per cent forecast a reduction, citing positive sentiment regarding expected new orders growth as a key driver of confidence in the months ahead
Irish Manufacturing PMI AIB New Orders Middle East War
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