New data shows that the country's manufacturing industry last month saw the first deterioration in operating conditions since February.
The NCB Purchasing Managers index for September - which shows the health of the manufacturing sector - fell below the no-change mark of 50 for the first time in seven months as new business, employment and pre-production levels all decreased. The PMI fell to 48.4 in September from a reading of 51.1 in August.
New business slowed slightly last month - the first reduction in seven months as companies reported a fall in demand. New export business also declined for the first time since October 2009.
Today's survey shows that firms cut their workforce for the fourth month in a row and at the sharpest pace since November 2009 as staff leaving work had not been replaced during the month.
It also reveals that input costs continues to rise sharply due to increased commodity prices. Companies were unable to pass on the higher prices to their customers due to the intense level of competition in the industry.
NCB economist Brian Devine said that the Irish economy, after expanding in the first quarter on the back of impressive manufacturing output, contracted once again in the second quarter.
