The rate of inflation was the highest in three years, according to the AIB Ireland Manufacturing Purchasing Managers Index (PMI). Anecdotal evidence suggests this was due to a combination of rising prices for raw materials, and suppliers passing on higher wage costs.
Because client demand was strong, manufacturers were able to offset the cost pressures by passing on higher prices to their customers. This meant the January survey also found a solid rise in the average prices charged by Irish manufacturers, although factory-gate charges rose to a lesser extent than input costs.
In terms of activity, there was a quiet start to the year, with manufacturing production rising, for the third consecutive month, but at a slower rate than in December.
The sector started the year on a positive footing
There was a slight reduction in new work from abroad. The seasonally adjusted new export orders index has now come in below the no-change mark of 50 in five of the last six months. This is being attributed to softer demand and also increased competition.
Irish manufacturers are still seeing the effects of global economic uncertainty, which is leading to more risk aversion among clients. However, most are optimistic about their growth prospects this year.
“The AIB Irish Manufacturing PMI indicated that the sector started the year on a positive footing, with the index at 52.2, unchanged compared to December. It has now signalled growth in each month since the beginning of 2025,” David McNamara, AIB’s chief economist, said.
“The expansion in January was due to sustained gains in output, new orders and employment. The Irish Manufacturing PMI remains above the flash January readings for the eurozone, US and UK at 49.4, 51.9 and 51.6, respectively.”
The index is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of about 250 manufacturers. The data for this survey was collected between January 12 and January 23.
Staffing numbers increased at a solid pace in January. The seasonally adjusted employment index showed that the pace of job creation accelerated for the second month, and was at its fastest since July 2025.
Just over half of those surveyed predicted an increase in production volumes during the year ahead, while only 7pc expected a decline.
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