Business conditions across the Irish manufacturing sector hit their best level in four years last month, new data from AIB show.This bank’s latest PMI report for the sector says there were increases in new orders as well as further strong increases in production, employment and purchasing activity. It also highlights sustained efforts to build safety stocks and bring forward input buying in response to intense supply-chain pressures linked to the Middle East conflict. Overall input costs increased at the fastest rate for nearly four years, which led to another acceleration of factory gate price inflation during May.The headline figures, which are derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases, were 55.9 in May, up from 54.9 in April and the highest reading for four years. Any figure greater than 50 indicates overall improvement.All five index components provided a positive contribution to the PMI, led by robust rises in output, new orders and staffing numbers.Manufacturers recorded an increase in their production volumes for the seventh consecutive month. Moreover, the rate of output growth accelerated to its strongest since May 2025. Manufacturers mostly cited improving customer demand and the impact of long-run business expansion plans.New order books improved at a robust pace, with total new work rising at the fastest pace for just over four years. Goods producers commented on greater demand from both domestic and export markets. Some firms suggested a temporary boost to sales as clients brought forward purchases in anticipation of rising prices. However, there were also reports that elevated geopolitical uncertainties had weighed on investment spending in some cases.Export orders remained a bright spot for Irish manufacturers, with manufacturers mostly noting improved sales to clients in the UK, US and Asia. The latest increase in total new work from abroad was the steepest since August 2021.Will new pay transparency rules close the gender pay gap for good? Listen | 28:55The data indicated a marked increase in staffing levels across the sector. Higher payroll numbers have been recorded since December 2024 and the rate of job creation accelerated to its strongest for nearly four years. Anecdotal evidence pointed to ongoing business investment plans and the need to expand operating capacity.A combination of rising demand and worsening supply conditions led to a solid accumulation of unfinished business. Increased backlogs of work have now been recorded for three months in a row and the latest expansion was the steepest since April 2022.Purchasing activity continued to expand in May, supported by improved order books and efforts to boost warehouse inventories.Stocks of purchases and pre-production inventories increased since April, in part due to concerns about the outlook for global supply chains.The latest data signalled another steep lengthening of average lead times among vendors, with the respective seasonally adjusted index pointing to the sharpest deterioration in supplier performance since October 2022. This was overwhelmingly linked to international shipping delays and some raw material shortages.More than half of the survey panel reported an increase in their purchasing costs during May, while only 1 per cent noted a decline. This pointed to the strongest pace of input cost inflation since July 2022, which was mainly attributed to higher fuel and raw material prices.Efforts to pass on higher input costs to clients led to the strongest rate of factory gate price inflation since December 2022.Irish manufacturers again noted that rising inflationary pressures and global supply chain challenges were factors weighing on the year-ahead business outlook. However, business activity expectations rebounded from the 25-month low seen in April and were the highest since February. Anecdotal evidence suggested that improving sales pipelines, planned expansion across new export markets and long-term investments in plant capacity had all supported business optimism in May.