The manufacturing sector in Ireland fell into contraction for the first time in over three years, with business conditions deteriorating for the fifth time in the past six months. The AIB Ireland Manufacturing PMI index slid down to 49.7 in November from 50.7 in October, falling below the 50-threshold indicating contraction.

While overall new business orders increased, production posted a slight decline, driving down employment in the Irish manufacturing sector as well. Export sales also contracted at a faster pace in November as demand from customers located in the UK and the US declined.

Employment in the manufacturing sector weakened for the first time since September 2016 as companies adjusted their staffing needs in alignment with weakening demand. Meanwhile, inventories of finished goods climbed higher for the sixth consecutive month during November.

On the positive side, however, business sentiment among manufacturers in Ireland improved in November from the previous month. This sub-index touched the highest level in five months even though Brexit uncertainties kept the sentiment under pressure. Irish manufacturers anticipate growth to pick up in the coming 12 months, driven by an increase in export orders and are anticipated to invest in new machinery as well in the coming year.