Output growth in Irish manufacturing slowed in January amid lacklustre demand and heightened global economic uncertainty as the Greenland crisis unfolded, according to the latest AIB Irish Manufacturing Purchasing Managers’ Index (PMI) published on Tuesday.
The PMI came in a month when European and US relations were in a state of chaos amid plans by US president Donald Trump to annex Greenland, with Mr Trump threatening to ramp up tariffs if European companies did not comply. Mr Trump later rolled back on his plans after a meeting at the World Economic Forum, held in Davos, Switzerland.
According to the January PMI, January saw a marginal rise in total new work, with growth the weakest since August 2025. Survey respondents cited the elevated economic uncertainty, risk aversion among clients and softer demand across export markets as the main factors weighing on order books.
“Respondents noted that elevated global uncertainty acted as a sales headwind. This was also evident in sluggish growth of new orders and a fall in export orders,” said AIB chief economist David McNamara.
While output growth slowed, goods producers were nevertheless optimistic about their growth prospects for the next 12 months. Confidence reached its highest since August 2023, which supported solid rises in input buying and staff hiring during January.
“Hiring accelerated to the fastest rate since July 2025, as firms’ plans for expansion spurred a rise in employment. Moreover, purchasing activity and stock building by firms also picked in January, pointing to some optimism for the year ahead, despite current uncertainty,” said Mr McNamara.
Anecdotal evidence suggested intense competition and softer underlying demand had led to reduced export sales, though there were some reports of greater sales to the UK and mainland Europe.
The PMI reported January saw a “solid” rise in average prices charged by Irish manufacturers. The seasonally adjusted Output Prices Index picked up sharply since December and was the highest for five months, with companies trying to protect margins from cost inflation. Mr McNamara said the rate of inflation for input and output costs increased sharply in January. “Respondents noted raw materials and staff costs, but client demand was strong enough to offset input cost pressures with higher prices for customers.”
Overall, more than half of manufacturing purchasing managers in the survey predict a rise in production volumes this year, while only 7% foresee a decline. Businesses were hopeful of improved economic conditions, both from domestic and international markets and “many firms noted new export opportunities”, the survey said. This comes as the EU agreed a trade deal with India while the EU-Mercosur deal was also agreed, though the Mercosur deal faces an EU legal review.
The PMI gathers responses from a panel of around 250 manufacturers. The headline AIB Ireland Manufacturing PMI is a composite single-figure indicator of manufacturing performance derived from indicators for new orders, output, employment, suppliers’ delivery times, and stocks of purchases. Any figure greater than 50 indicates overall improvement of the sector. Adjusted for seasonal factors, the AIB Ireland Manufacturing PMI posted 52.2 in January, to signal a moderate overall improvement in manufacturing sector conditions. The reading was unchanged since December and above the neutral 50.0 value for the 13th successive month.
