The country's manufacturing sector remained in contraction for a third successive month in May, according to the latest Investec purchasing managers index.

However, there were signs of a return to stabilisation in the month as the index showed a reading of 49.7. Any figure under 50 signals contraction in a sector, while a figure over 50 signals growth.

Output, new orders and employment all decreased at slower rates during the month. There was also a further easing in the rate of inflation on the cost front.

Today's index comes a day after the PMIs for the euro zone showed that the downturn in manufacturing eased somewhat in May. 

This suggested an improvement in overall economic performance in the month, which means that another rate cut is less likely when the ECB meets later in the week.

''The latest Investec Manufacturing PMI shows that activity in the Irish manufacturing sector remained in contraction during May, albeit the pace of decline was the slowest seen since the PMI fell below the 50 no-change level in March, commented Investec Ireland's chief economist Philip O'Sullivan.

''The headline PMI reading, at 49.7, indicates that activity may be beginning to stabilise, however, forward-looking components suggest that a return to the pace of growth recorded during 2012 may be some months away,'' he said.

Manufacturing accounts for about a quarter of Ireland's gross domestic product, according to World Bank figures.

With weakened demand from abroad hitting goods exports particularly hard, Ireland has become increasingly reliant on its services industry and PMI data for that sector hit a three month high in April.