AIB Global S&P PMI Dips as Growth Slows in Post-Pandemic Ireland Economy

Summary

  • The AIB Global S&P Purchasing Managers’ Index (PMI) dropped to 50.5 from 53.2 in December, indicating a slower expansion.
  • This decline is the lowest since the post-pandemic comeback, primarily due to companies completing their backlog.
  • Despite the slowdown, Ireland’s economy was the fastest-growing in the euro zone in 2022.
  • New export order growth is on the rise and sentiment stays above the long-run survey trend.
  • Increased inflation is seen due to higher labour costs, leading to a hike in customer prices.
  • Ireland’s composite PMI remains positive despite a slight decline in manufacturing activity.

AIB Global S&P PMI Decline

In December, the AIB Global S&P Purchasing Managers’ Index (PMI) experienced a decline, dropping to 50.5 from 53.2. The index has consistently been over the 50 threshold, which differentiates growth from contraction, since March 2021. Despite this drop, it has maintained a solid average rate of 55.5 throughout 2023.

The most recent rate of expansion is the slowest since the revival following the pandemic. This decline is primarily driven by businesses finishing their outstanding tasks, leading to a drop in work volume for the first time in three years.

Performance in 2022/Economic Outlook

In 2022, Ireland’s economy outpaced others in the euro zone, spurred by a robust post-pandemic recovery. However, the upward momentum experienced a slowdown, with economic activity plateauing in the third quarter.

Nonetheless, mixed indicators were evident from Tuesday’s release. Employment saw an upswing from a 34-month low in December, export order growth accelerated at a rapid pace unseen in five months, and sentiment remained above the long-run survey trend.

Inflation Trends

Input price inflation, however, increased for the second month in a row. This was primarily attributed to rising labour costs which were passed on to clients, culminating in the highest level of consumer prices in seven months.

The composite PMI of Ireland remains in the positive despite a trivial decline in manufacturing activity last month.

As global economic indicators, such PMI reports can significantly impact forex markets and trading decisions, specifically those with direct ties to Ireland’s economic performance.

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