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Irish Times
13 hours ago
- Business
- Irish Times
Irish manufacturing output growing for fifth straight month
Irish manufacturing output recorded another 'robust increase' in May, extending the current period of growth to five months, according to AIB . Some Irish firms recorded subdued spending by US clients, but concerns about the impact of tariffs and global economic uncertainty had eased slightly in May. The bank's manufacturing purchasing managers' index (PMI) retracted slightly to 52.6 in May, after April's 34-month high of 53.0. The index remained above the neutral 50 threshold, indicating overall expansion in the sector for the fifth month running, the longest growth sequence in more than two years. READ MORE The latest improvement in overall business conditions was driven by relatively strong rates of output and new business growth, AIB said. 'The rise in May was broad-based, with robust growth in output and new orders, and signs of easing tariff-related concerns,' said David McNamara, AIB chief economist. Mr McNamara said the reading for the Irish manufacturing industry 'remains above the flash May readings for the Eurozone, US and UK at 49.4, 52.3 and 45.1, respectively'. AIB has increased its activity expectations for manufacturing business, having recovered from April's eight-month low. Staff hiring has increased to its fastest rate since January, in reaction to rising workloads and improving projections for customer demand. 'Export sales remained a weak spot in May, with total new work from abroad decreasing for the second month running,' the PMI said, noting anecdotal evidence from goods producers that export demand from US and UK clients was down on the previous month. [ EU warns it could accelerate retaliatory tariffs over US duties Opens in new window ] The destocking streak ongoing since February continued in May, with survey respondents indicating deliberate inventory reduction strategies or subdued demand as causal factors. Manufacturers saw a 'further sharp increase' in input prices, down only slightly from the 26-month high in April with the input price inflation linked to commodities and other raw materials. There was a corresponding level of output price inflation which increased slightly, with manufacturers passing on higher input costs they incurred in May, but AIB's chief economist noted the rate of inflation remains 'well below that observed throughout the past 12 months'. 'Despite ongoing geopolitical and tariff uncertainty, Irish manufacturers maintained a generally upbeat assessment of the outlook for activity levels over the coming year. 'Around 39 per cent of the respondents predict a rise in output levels during the year ahead, while 9 per cent expect a decline,' Mr McNamara said, reflecting data collected from the May 12th to 22nd.
Irish Examiner
14 hours ago
- Business
- Irish Examiner
Irish manufacturing expands in May, outperforming Europe, the US and the UK
Irish manufacturing output recorded another month of robust growth in May, with output volumes increasing for a fifth consecutive month. A solid rise in total new work, along with improving domestic demand, helped to offset weaker export order books. The AIB Irish Manufacturing PMI came in at 52.6 in May, down slightly from 53.0 in April but above the 50.0 mark, indicating output growth. The figure is derived from indicators for new orders, output, employment, suppliers' delivery times and stocks of purchases. The survey of 250 Irish manufacturing firms across the country also resulted in a stronger reading than the Eurozone, the US and the UK. According to the survey, some Irish firms noted subdued spending by US clients, suggesting concerns about the impact of tariffs and global trade tensions had eased in May. As a result, business activity expectations for the year ahead recovered from April's eight-month low and staff hiring edged up to its fastest since January. Export sales remained a weak spot in May, with total new work from abroad decreasing for the second month running. The pace of the contraction accelerated to its fastest since December 2024. Goods producers noted subdued spending by US and UK clients, linked to elevated global economic uncertainty. Survey respondents commented on resilient demand conditions, improving sales pipelines and the impact of long-term business development plans. "Output rose strongly in May, amid a general rebound in domestic demand conditions," AIB's Chief Economist, David McNamara, said. "This was reflected in robust growth in new orders. Nonetheless, some respondents noted weak US and UK demand, dragging down export orders, for a second consecutive month. Employment expanded, with the pace of hiring picking up as firms reacted to rising workloads." Cost pressures continued in May, despite the rate of input price inflation easing from April's 26-month high. A number of firms noted rising prices paid for agricultural commodities and other raw materials. Some manufacturers suggested that exchange rate appreciation against the US dollar had helped to limit price pressures from imported items. The survey of Irish firms found backlogs of work decreased for the third month running. Improving order books and new projects spurred a sustained upturn in staff recruitment. The rate of job creation edged up to its fastest since January. Greater employment numbers also reflected an improvement in optimism levels, recovering from the eight-month low seen in April amid fewer comments from survey respondents about the likely impact of US tariffs on business prospects. "Despite ongoing geopolitical and tariff uncertainty, Irish manufacturers maintained a generally upbeat assessment of the outlook for activity levels over the coming year. Around 39% of the respondents predict a rise in output levels during the year ahead, while 9% expect a decline," Mr McNamara said.
Irish Examiner
26-05-2025
- Business
- Irish Examiner
David McNamara: Signs of easing on Irish jobs market
The recent exceptional growth in the Irish labour market continued in the first quarter of 2025. The latest labour force survey (LFS) shows employment rose 1.3% in the quarter, and the annual growth rate accelerated to 3.3% y/y (+2.7% y/y in Q4 2024), with nearly 90,000 jobs created in the past year. Total employment in Ireland is now at 2.8 million and has grown rapidly by 427,000 (+19%) over the past five years, particularly in the post-covid period. At a sectoral level, the out-turn was broadly positive. Of the 14 sub-sectors, 12 registered growth in the year to Q1 2025. Annual growth was led by Financial Services (+11.5%), Education (+9.3%), and Information & Communication (+8.2%). The weakest performers were Wholesale & Retail (-2.5%) and Agriculture (-0.8%). Unemployment remains low, ticking down to a 4% rate in Q1 2025 from 4.3% in Q4 2024. The jobless rate has now been below 5% for over three years, the longest such period it has been under that threshold on record. Furthermore, the long-term unemployment rate also remains exceptionally low at just 0.9%, from 1.0% a year ago, and the participation rate rose to 66.2% from 65.8% in Q4 2024. This sustains a period of exceptional growth in the labour force. Strong migration flows continue underpin new labour supply and jobs growth, accounting for half of annual employment growth, while the sharp rise in the female participation rate has also contributed significantly to rising labour force numbers. This leaves annual labour force growth at 3.5%, an acceleration from the 2.6% pace in Q4 2024. While the LFS data remain positive, there have been signs of a cooling in other jobs data of late. The latest hiring data from recruitment website suggest waning employer demand, with new job postings falling 16% year-on-year in mid-May 2025, reflecting a broad-based slowdown in hiring activity across sectors. The AIB PMI employment surveys point to still-solid hiring activity in the manufacturing, services and construction sectors; but signs of employer caution, with some firms noting 'non-replacement of voluntary leavers' in recent months. Monthly payrolls data from the CSO also suggest jobs growth has slowed of late from a near 3% annual pace at the end of 2024 to 1.5% in March 2025. These lead indicators suggest the sharp pace of growth evident in the LFS in Q1 is unlikely to be sustained, with annual growth likely to slow towards 2%. David McNamara is Chief Economist with AIB Read More David McNamara: UK economy moves back towards EU orbit
Extra.ie
26-05-2025
- Business
- Extra.ie
Irish economy faces shaky future as two factors set to curb consumer spending
The Irish economy faces a shaky future over global tensions as well as US threats to impose a 50% tariff on American imports from the EU. Political uncertainty over Donald Trump's tariffs, and the ongoing conflicts in Ukraine and Gaza, are likely to see Irish consumer spending decline until 2026, according to AIB's latest Economic Outlook Report, published today. Today's top videos STORY CONTINUES BELOW It said international volatility remains high, and because of that, consumer spending and business investment growth in Ireland are expected to cool this year. US President Donald Trump. Pic:However, AIB said the Irish economy has built up resilience to withstand a potential trade shock in the short term. The bank's chief economist, David McNamara, said: 'The global macro backdrop has shifted considerably since our last Economic Outlook in autumn 2024. 'The uncertainty created by the dramatic shift in US trade policy and the responses of other key trading blocs is expected to dampen global growth in 2025 and 2026. AIB. Pic: Artur Widak/NurPhoto/Shutterstock 'Given the globalised nature of the Irish economy, we expect significant volatility in GDP as exporters seek to get ahead of potential trade restrictions this year.' Mr McNamara added: 'For the domestic economy, we expect a cooling in growth this year, as ongoing uncertainty dampens both consumer spending and business investment growth.' The bank also forecast domestic demand will grow by 2.3% this year, slow to 2% next year, but bounce back to 2.6% in 2027. Pic: Shutterstock It also said that the labour market will continue to grow, but given the expected easing in economic growth, AIB expects a more modest expansion in employment, which is already at record levels. The bank said that following a 2.7% increase in jobs in 2024, it expects employment levels to grow by just 1.8% in 2027. AIB said Irish households are expected to reduce spending, while some business sectors may delay planned investment, particularly those in export-oriented areas. On the issue of trade with the US – Ireland's single largest trading partner, with more than € 95 billion of imports and exports last year – AIB said tariffs and future transatlantic tax policy are the main downside risks to the Irish economy. The report said that some exporting indigenous Irish sectors, such as agrifood, are exposed to US tariffs, but that the key risks centre on Ireland's multinational-dominated sectors. 'These sectors, which account for [around] 12% of total employment, are responsible for 50% of GDP and [around] 80% of exports generated in the economy. There is a heightened risk of tariffs on the Irish pharma sector, which, along with technology services, dominates multinational sector output,' it said. AIB added that the key medium-term risk to the Irish economy is the concentration of tax revenue from corporation tax and income tax from staff working for multinationals. However, it also said the economy has built up resilience to withstand potential trade and foreign direct investment (FDI) shocks in the short run. 'However, permanent tariffs or changes to the US tax code which would reduce Ireland's FDI attractiveness would pose a greater longer-term challenge,' it said. The bank added: 'The latter scenario would require diversifying Ireland's FDI and export base to non-US markets, a review of our industrial model, further fostering of indigenous enterprises, and a focus on boosting competitiveness.'
RTÉ News
26-05-2025
- Business
- RTÉ News
Could Ireland weather a tariff and FDI shock?
An escalation in trade tariffs could lead to a slowdown in global and Irish growth this year and next, according to AIB's latest Economic Outlook Report. The forecast comes after Friday's announcement by US President Donald Trump of a 50% tariff on EU imports to the US, which he has since confirmed will come into effect on June 1. Each report has a theme in focus, and this one is "Could Ireland weather a tariff and Foreign Direct Investment (FDI) shock? – A balance sheet perspective". A timely question. It finds the Irish economy has built up resilience to withstand potential trade and FDI shocks in the short run. However, permanent tariffs or changes to the US tax code which would reduce Ireland's FDI attractiveness, would pose a greater longer-term challenge. The latter scenario would require diversifying Ireland's FDI and export base to non-US markets, a review of our industrial model, further fostering of indigenous enterprises, and a focus on boosting competitiveness. Irish modified domestic demand is forecast to grow by 2.3% this year, 2% in 2026 and 2.6% in 2027, according to the bank. Irish households are expected to pare back spending growth while some business sectors may delay planned investments, particularly those in export-orientated sectors. The report reveals recent consumer spending has been robust. Public and private sector balance sheets have low debt levels and high savings on aggregate. While economic risks are tilted to the downside, balance sheet resilience remains a mitigant. The report finds US tariffs and future US tax policy are the main downside risks to the Irish economy. Some exporting indigenous Irish sectors such as agri-food are exposed to US tariffs, but the key risk centres on Ireland's multinational-dominated sectors. These sectors, which account for around 12% of total employment, are responsible for 50% of GDP and around 80% of exports generated in the economy. There is a heightened risk of tariffs on the Irish pharma sector, which, along with technology services, dominates multinational sector output. According to the forecast, any negative spillovers from the multinational sector could hit domestic sector output and employment. However, the key medium-term risk to the Irish economy is the concentration of our taxation base in corporation and income taxes sourced from the multinational sector. The report forecasts continued growth in the labour market, but given the expected easing in economic growth, we expect a more modest expansion in employment. Following a 2.7% rise in 2024 we see employment growth slowing to 2% in 2025, 1.5% in 2016 and 1.8% in 2027. Although supply chain spillovers from the multinational sector to the domestic economy are significant, the employment footprint of the sector is relatively small, and generally focused on urban centres. AIB Chief Economist David McNamara said "The global macro backdrop has shifted considerably since our last Economic Outlook in Autumn 2024. The uncertainty created by the dramatic shift in US trade policy and the responses of other key trading blocs, is expected to dampen global growth in 2025 and 2026. "Given the globalised nature of the Irish economy, we expect significant volatility in GDP as exporters seek to get ahead of potential trade restrictions this year," Mr McNamara said. "For the domestic economy we expect a cooling in growth this year, as ongoing uncertainty dampens both consumer spending and business investment growth. Nonetheless, Ireland enters this period of uncertainty from a position of strength, with the economy growing at a robust pace in recent months, while both the public and private sectors have built up material financial buffers in recent years."
