Irish manufacturing growth slows in August as demand weakens, PMI shows

DUBLIN (Reuters) -Growth in Ireland's manufacturing sector slowed in August as output and new business growth eased to their weakest rates in seven months, a survey showed on Monday.

The AIB Ireland Manufacturing Purchasing Managers' Index (PMI) fell to 51.6 in August from 53.2 in July, marking the slowest improvement in business conditions since March. PMI readings above 50 indicate growth, while those below signal contraction.

The report highlighted subdued demand, particularly in export markets, as a key factor behind the slowdown. New business intakes rose only marginally, with the latest upturn in order books being the slowest since January.

Respondents cited intense competition and a lack of willingness to spend as reasons for the sluggish demand. A number of firms cited lower volumes of new business from UK clients.

Despite the overall slowdown, business optimism for the year ahead rose to its highest since December 2024, with 44% of surveyed firms expecting a rise in output, up from 35% in July.

"Manufacturers linked business optimism to hopes of an improvement in the global economic backdrop and a subsequent rise in customer demand," said David McNamara, AIB Chief Economist.

The survey showed a slight decrease in job creation, with employment numbers expanding at a slower pace than in previous months. Additionally, purchasing activity contracted for the first time in five months, reflecting efforts to streamline inventories amid softer demand.

Cost pressures increased in August as higher raw material costs from earlier in the year filtered through but the rate of inflation eased to the slowest since June 2024.

(Reporting by Graham Fahy; Editing by Toby Chopra)