Factories are sending out a distress signal as output fell at a “sustained” rate and export sales fell sharply in April.
The latest AIB Ireland Manufacturing Purchasing Managers’ Index showed production last month fell by its sharpest rate for six months, as purchasing managers also pointed to reduced spending by building firms.
The overall reading fell to 47.6 from 49.6 in March, where any reading below 50 means that manufacturing has declined in the month.
“This decline in the headline index reflects underlying weakness in output, new orders, and hiring trends in the sector last month,” said AIB chief economist David McNamara.
”On a positive note, input price inflation eased sharply in April to a three-month low, with respondents pointing to cheaper raw material costs,” Mr McNamara said.
The Irish index is just one of a series of surveys of purchasing managers carried out on a monthly basis in almost every region in the world.
The Irish survey also includes the huge number of pharma, tech, and medical equipment makers that for the most part serve world markets and is closely watched around the world.
Capital Economist chief Europe economist Andrew Kenningham said that new figures showing the eurozone had emerged from recession will not stop the European Central Bank (ECB) from starting to cut interest rates in June.
“While the eurozone’s mild recession appears to be over, we think the economy will expand at a only a moderate pace over the rest of the year,” Mr Kenningham said.
“Some of the improvement in the first quarter was due to temporary factors, such as a rebound in construction”, but business surveys suggest that activity will be sluggish, he said.
GDP across the eurozone expanded by 0.3% in the three months to the end of March, statistics agency Eurostat reported.
This means the eurozone’s shallow recession is over — after GDP shrank by 0.1% in both the third and fourth quarters of last year, which was a technical recession.
Eurozone growth has been held back by high interest rates, as the ECB has battled inflation, while the cost-of- living crisis hit consumer spending.
Eurozone GDP was lifted by stronger-than-expected growth in Germany, France, Italy, and Spain.
Figures published by the Central Statistics Office last week showed GDP expanded by 1.1% — the highest increase compared to the previous quarter, followed by Latvia, Lithuania, and Hungary.
Sweden, where the economy contracted by 0.1%, was the only member that recorded a decrease compared to the previous quarter.
The year-on-year growth rates were positive for nine countries and negative for four.
France had a good quarter by reporting growth of 0.2% — which was hailed by its economy minister — and Spain posted an outsized expansion rate of 0.7%. Germany has matched France, with 0.2% growth, while Italy expanded its GDP by 0.3%.
Lower energy prices, falling inflation, rising real wages, and the prospect of cuts in interest rates helped to boost activity after a downbeat 2023 in which the eurozone only grew in one quarter.
Centre for Economics and Business Research managing economist Sam Miley, said that the eurozone had turned a corner since the beginning of 2024.
“Prospects are likely to improve further throughout the year, driven by the expectation of interest rate cuts,” Mr Miley said.
- Additional reporting, Guardian service