Ireland’s manufacturing sector ended the year strongly as firms prepared for the end of the Brexit transition period.

AIB Ireland’s PMI recorded 57.2 in December, up from 52.3 in November, as firms expanded their inventories to cope with a potential hard Brexit. Any figure above 50 means activity grew.

New orders and output both rose at the fastest rates since July, when a resumption of economic activity after the first lockdown boosted activity.

Orders brought forward

“New orders increased strongly in the month, which translated into a marked rise in production,” said AIB chief economist Oliver Mangan. “This was partly due to customers bringing forward orders with the Brexit transition period expiring at the end of the month.”

For the same reason, manufacturers also stepped up their purchases of raw materials.

A higher level of work also saw firms increase their workforce for the third consecutive month, with employment expanding at its strongest rate since April 2019.

Delivery delays

But Mr Mangan said supply chains remained under pressure, with companies reporting shortages in raw materials as well as delays in deliveries owing to congestion at ports and on roads.

Price pressures continued to build, with a further sharp increase in prices of raw materials.

"Firms remain optimistic about the 12-month outlook for production, no doubt hopeful that the recent positive news on COVID vaccines will help bring about an improvement in economic conditions over the course of 2021," said the economist.