Weaker demand meant that growth in the manufacturing sector of the economy slowed again in July.

The AIB manufacturing PMI, compiled by S&P Global, recorded 51.8 – down from 53.1 in June and the lowest figure since January 2021. Any figure above 50 means that activity grew.

New orders, however, fell for the second month in a row, with firms blaming weaker demand at home and internationally, in part due to rising costs. Factory production also declined for the second consecutive month.

Inflation continued to affect costs for manufacturing firms, with prices of materials, energy and labour rising at close to their fastest pace since 1998.

Firms also raised their charges in response to higher costs.

Firms still positive

“The overall headline PMI was supported by a further rise in employment, albeit at the slowest pace since February 2021, as well as a solid increase in stocks of input purchases,” commented AIB chief economist Oliver Mangan.

He pointed out that the Irish figures were in line with trends being seen elsewhere – the flash July index fell to 52.2 in the UK, and dropped to 49.6 in the euro zone.

The survey showed that Irish manufacturers remained positive on the outlook for output over the next 12 months, with optimism levels moving up to a three-month high.

AIB said, however, that the level of optimism remained “subdued”, amid concerns about the near-term economic outlook.