Activity in the manufacturing sector contracted at the slowest pace in a year in August but demand for new orders deteriorated further, the latest survey shows.
The NCB Purchasing Managers' Index (PMI) rose to 44 from 43.7 in July after the rate of job cuts and decline in output and export orders slowed. The index, however, was still below the 50 mark separating growth from contraction.
Production has now declined in each of the past 18 months.
The index reveals that new business levels fell sharply last month, and at a faster pace than seen in July. Companies said that demand continued to weaken with clients putting off buying decisions due to the wider recession.
Employment levels also declined sharply as firms adapted to lower demand and reduced workloads. However, the pace of decline was the slowest since May 2008, NCB noted.
It said that increased competition for work was the main cause for the latest sharp fall in input costs. Output prices also fell as companies tried to stimulate demand.
Buying activity fell at the steepest pace since May last month, extending the current period of reduction to 21 months.
'While it is encouraging to see the pace of job-shedding slowing, it is disappointing to note that the pace of contraction in new orders increased for the second month running,' commented NCB economist Brian Devine.
He said that while Irish industrial output and Irish merchandise exports have been buoyed by the 'particularly impressive' performance of the chemical and pharmaceutical sector, the reality is that most other sectors have struggled.
'A more broad-based improvement in manufacturing is needed to boost the Irish economy,' he concluded.
