Ireland's manufacturing sector grew at a softer pace in February as further gains in new orders and output were offset by a renewed fall in jobs, survey data from IHS Markit showed on Monday.
The seasonally adjusted AIB factory Purchasing Managers' Index, or PMI, fell to 51.2 in February from 51.4 in January, which was a nine-month high. Any reading above 50 indicates expansion in the sector.
"The PMI data show, though, that the sector is facing a number of challenges and firms are cautious as evidenced, by falls in employment, inventories and sentiment," Oliver Mangan, AIB chief economist, said.
Production growth was the fastest in a year despite the impact of storms and reports of supply chain disruptions caused by the coronavirus outbreak.
New orders grew for the fourth time in five months in February and at a faster rate. But, new export orders decreased for the eighth time in ten months, due to weaker demand from the Chinese and European markets.
Suppliers' delivery times increased the most since March 2019, mainly led by the problems with Chinese suppliers and due to the impact of the stormy weather. Stocks of inputs fell at the fastest rate since July 2016, thus manufacturers reduced the total volume of inputs ordered in February.
The rate of inflation quickened in February as the manufacturers paid higher for inputs. The input pries index remained at the third lowest level since July 2016. Output prices increased at the fastest rate since March 2019.
Employment fell for the third time in four months in February, mainly due to non-replacement of leavers, and the rate of job shedding was the fastest in seven years, but was modest.
The Future Output Index declined sharply in February, but remained positive, and above the levels seen during the second half of 2019.
"Virus-related disruptions, as well as domestic political uncertainty following an inconclusive general election, were cited as factors behind an easing of business sentiment in February regarding the outlook for the coming 12 months," Mangan said.
"Concern about the outlook for business post the Brexit transition period also weighed on sentiment and was flagged too as weighing on new orders, although it still managed to hit a 10-month high."