Despite this, the sector is facing a number of challenges with 70% citing labour costs as their biggest issue this year followed closely by attracting and retaining staff cited by 65% of companies.

“This is similar to 2023 data and will continue to pose a major challenge for businesses in the next six months, given full employment with 30% expecting to increase employee numbers, on top of the regulated labour cost increases scheduled in 2025,” the report said.

Another challenge cited by 53% was the availability of housing for employees.

Numerous companies are also prepared for increasing costs with 76% saying wage growth will increase over the next six months. In addition, 52% of companies said the cost of raw materials and transport will also rise.

However, 48% also expect productivity to increase while 37% believe profitability will increase. Increasing productivity was seen as the top priority for the coming year by 33% of people.

Some companies were a bit more negative about the outlook with one in five expecting profitability and employee numbers to decrease with both of these indices peaking as high as 33% amongst food and drink manufacturers.

Nearly half of all companies surveyed, 48%, expect capital investment to increase and the growth in investment in research and development.

Ibec membership and sectors director Sharon Higgins said the manufacturing industry is “undergoing significant change, and it is essential to adapt to these developments”.

She said as deliberations over the programme for government begin, it is “crucial to address the competitiveness challenges facing the manufacturing sector to ensure its continued success during this transformative period”.

Ms Higgins said 65% of manufacturing companies cited talent availability as a major challenge with “greater industry engagement with the education sector” being necessary.

“Additionally, streamlining work permit and visa processes is vital for attracting the talent needed to sustain the industry’s growth,” she said.

This report comes following data from the Central Statistics Office which shows that production in manufacturing industries between August and October was 9.4% higher when compared to the same period in 2023.

In the highly globalised “modern” manufacturing sector — which includes pharmaceuticals and electronics — production rose by 10.3% year-on-year. In comparison, the “traditional” sector grew by 5.3%.

The traditional manufacturing sector encompasses all sectors not categorised as “modern”.