Manufacturing output rose slightly in January, new figures show.
The latest Purchasing Managers Index from AIB shows an overall improvement for the sector.
The headline index rose from 48.9 in December to 49.5.
However, the index remains below the 50 mark, which signals a slight fall in activity during the month.
Weaker manufacturing conditions have been recorded in four of the past five months, with the latest downturn largely reflecting another reduction in total new orders.
Despite this, the Irish reading was above the Eurozone and UK readings, at 46.6 and 47.3.
"A rise in output, export orders and employment, alongside marked destocking, were the key features of the January PMI survey," said David McNamara, AIB Chief Economist.
"While new orders fell again in January owing to weaker domestic demand, export orders rose for a second consecutive month and at the fastest pace in nearly two years.
"Higher demand in Europe and Asia were cited as factors in the rebound," he added.
Mr McNamara said companies continued to pursue inventory reduction strategies against a backdrop of subdued customer demand.
"This was reflected in further sharp falls in stocks of both inputs and finished goods, with the former declining at the sharpest pace in over three years amid a steep drop in the purchasing of inputs," he explained.
Today's data shows that input price growth eased during the month, with respondents reporting lower raw material and energy prices.
These price declines offset higher shipping costs and supplier price hikes linked to increased delivery times due to trade disruptions on items shipped via the Red Sea.
According to the latest PMI, business optimism across the sector weakened in January.
Respondents said heightened geopolitical risks and global economic uncertainty had weighed on sentiment.
