Falling demand led to a drop in the output of the manufacturing sector here in November, the latest AIB Manufacturing Purchasing Managers Index (PMI) shows.

There was also a drop in manufacturing employment during the month, the first fall in two years.

However, there were some signs of positivity, with input price inflation easing to a 21-month low.

Supply chains which seized up during the pandemic also showed further signs of recovery, the PMI says.

Overall the PMI fell for the seventh time in eight months to 48.7 in November, down from 51.4 the previous month.

This represented the first overall deterioration in operating conditions in the goods-producing sector since the first lockdown in May 2020.

"The fall in the index is no surprise as new orders have been in decline since June, and this has eventually resulted in a downturn in activity in the sector," claimed Oliver Mangan, chief economist at AIB.

A central factor in the overall downturn was a continued drop in incoming new orders at goods producers.

"New business declined for the sixth consecutive month, the longest sequence of contraction in over 13 years," the report says.

"Moreover, the rate of decline in the latest period was the fastest since August 2009, when excluding the pandemic period."

This weakness in demand reflected pessimism regarding a potential recession, high inflation deterring customers and previous overstocking at clients, according to AIB.

However, on a positive note the report shows that new export orders fell at the slowest rate of the current six-month sequence of decline.

"Overall, this was a weak Irish report," Mr Mangan said.

"New orders, including export orders, declined for a sixth consecutive month, registering quite a sharp fall in November. This led to a renewed drop in output, the fifth decline in the past six months."