Ireland’s manufacturing sector lost momentum in October, with growth easing to its slowest pace in nearly a year as production stalled and new business orders softened, according to the latest AIB Manufacturing Purchasing Managers’ Index (PMI).
The PMI slipped to 50.9 in October from 51.8 in September, remaining just above the 50-point threshold that separates expansion from contraction. Despite staying in growth territory for all of 2025 so far, the report highlights mounting challenges for manufacturers amid subdued external demand and rising competitive pressures.
Production volumes were flat during the month, ending a nine-month stretch of continuous expansion. New orders grew only marginally, with companies citing intense market competition and weaker demand from European customers as the main headwinds.
Employment in the sector rose for the eleventh consecutive month, although at a slower pace. Several firms reported that hiring was constrained by skill shortages, limiting their ability to expand capacity.
On the cost side, input price inflation eased to its lowest level in 17 months, helped by falling raw material costs. However, persistent wage and energy pressures continued to weigh on margins. Output prices rose only slightly and at the slowest pace since May 2024, as manufacturers faced pressure to keep prices competitive.
Despite the slowdown, sentiment in the sector remained broadly positive. About 45% of manufacturers said they expect production to rise over the next year, while only 9% foresee a decline. However, overall confidence slipped to a three-month low amid concerns about uncertain export demand and global economic conditions.
Firms pointed to new product launches and expansion into overseas markets as key drivers of future growth.
The broader Irish economy has remained resilient despite the manufacturing slowdown. Modified domestic demand (MDD) — the government’s preferred measure of underlying economic activity — grew by 3.8% year-on-year in the first half of 2025, supported by strong consumer spending, investment, and government expenditure.
Reflecting that resilience, the Department of Finance last month raised its full-year growth forecast to 3.3% from 2%, saying the economy had largely withstood the impact of new U.S. tariffs on EU goods.
Analysts say the manufacturing sector’s latest figures suggest a period of consolidation rather than contraction, as firms adjust to slower export growth and competitive pressures. With cost inflation easing and domestic demand holding firm, the outlook remains cautiously optimistic heading into 2026.
