Irish manufacturing suffers record fallsChristian Fernsby ▼ | May 4, 2020
The April AIB PMI survey of Irish manufacturers revealed a deepening downturn in the sector at the start of the second quarter of 2020, as the economic fallout from lockdowns imposed across Europe and the wider world led to a collapse in demand.
Ireland Irish factory
Jobs were shed at the joint-fastest rate on record and the 12-month outlook deteriorated further.
The headline AIB Ireland Manufacturing PMI is a composite single-figure indicator of manufacturing performance.
It is derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases.
Any figure greater than 50.0 indicates overall improvement of the sector.
The PMI plummeted to 36.0 in April, from 45.1 in March, the lowest since March 2009.
The month-on-month decline in the headline figure, at 9.1 points, was a new survey record, easily beating March's 6.1-point fall.
The latest figure was the third-lowest on record, behind February 2009 and March 2009.
As was the case in March, the level of the PMI was supported by a record lengthening of suppliers' delivery times, the index for which is inverted in the PMI calculation as longer times are usually associated with improving demand.
With a 15% weight, the 13.3-point drop in the suppliers' delivery times index boosted the PMI by 2 points.
A truer picture of the severity of the hit to manufacturing activity in April was provided by the indices for output and new orders, accounting for 55% of the PMI weight.
Both hit record lows during the month, signalling rates of decline that were unprecedented in at least 22 years.
The output index fell a record 21.8 points, eclipsing March's drop.
More encouragingly, new orders declined at a slower rate than production, as the respective index posted a less marked month-on-month drop than in March.
Manufacturing employment also weighed heavily on the headline PMI in April.
The rate of job shedding, already sharp in March, accelerated to the joint-fastest in the 22-year survey history, matching the pace recorded in February 2009.
Data signalled collapsing demand from both domestic and export markets.
New export orders contracted at a surveyrecord pace, with the decline sharper than that recorded for total new orders.
Although output declined rapidly in April, backlogs of work contracted at the fastest rate since September 2011, continuing a sequence of depletion that began in September 2018.
Purchasing activity was substantially scaled back in light of the collapse in demand linked to the global coronavirus pandemic.
The volume of inputs ordered by manufacturers fell at a survey-record rate that was similar to the extent of the drop seen in new work.
Consequently, stocks of inputs fell at the fastest rate in eight years, despite the rapid decline in production.
Lower demand for inputs generally and also the crash in global oil prices led to the fastest decline in average input prices since March 2016.
Meanwhile, manufacturers cut their charges at the strongest rate since August 2019, in an attempt to bring in revenues.
The 12-month outlook weakened further in April as companies expected a recession in the aftermath of the coronavirus crisis.
The Future Output Index hit a new record low during the month, but the month-on-month decline in the index (-1.9 points) was much smaller than March's 17-point plunge. ■