There was a slight deterioration in business conditions in the manufacturing sector in December, the latest AIB Purchasing Managers Index showed.
The headline index – which is measured on a scale of 1 to 100 – fell to 48.9 in the month from the 50 breakeven point in November.
The outcome – while signalling a mild contraction in the sector in the month – was very close to the average for the year of 49.1.
The Irish measure was well above the flash December readings for the eurozone – 44.2 – and the UK – 46.4.
It was also higher that the flash US index of 48.2.
“A marginal fall in output, renewed decline in new orders, stable employment and marked destocking were the key features of the December PMI survey,” Oliver Mangan, Chief Economist of AIB said.
“While new orders fell, partly due to a focus on destocking, export orders rose for the first time in four months, with manufacturers reporting an upturn in demand from the UK,” he added.
Employment growth was broadly unchanged in the month which was attributed to difficulties in recruiting staff.
Firms concentrated on strategies to reduce their inventories against a backdrop of subdued customer demand, which was reflected in the reductions in the stock of inputs and finished goods.
“Manufacturers, however, remained optimistic on the outlook for the year ahead, with the business expectations index edging up to its highest level since September,” Mr Mangan noted.
Around half of the survey panel forecast a rise in production volumes over the course of 2024, while 7% predict a decline.
Firms saw renewed pressure on margins with input prices moving higher in December.
While average cost burdens increased moderately in the month, the rate of inflation was the highest for nine months.