The manufacturing sector continues to weaken, according to the latest industrial figures, which show a 3.4 per cent drop in manufacturing production in the three months ended January, compared to the previous three months.

Turnover was down 3.2 per cent over the same period.

The figures, published yesterday by the Central Statistics Office (CSO), show that production and turnover have fallen back sharply from the peak levels reached in early to mid 2002. Manufacturing production in January was 8.3 per cent down on the peak levels reached last March.

The figures show that production in January was 4 per cent higher than in January of last year.

However, turnover in January was down 3.4 per cent on the same month in 2002, indicating the downward pressure on prices facing many exporters, due to the stronger euro and the general pressure from multinational customers for lower prices.

For the first time, the CSO has broken down the figures to show the varying trends in the modern and more traditional industrial sectors. They show a more than threefold increase in production in the modern sector between 1996 and 2002. It classifies the modern sector as chemicals, computers, electrical machinery and equipment, and reproduction of recorded media, and says that about 86,000 people are employed in these firms, from total industrial employment of just over 250,000.

Output from all other sectors grew 16 per cent between 1996 and 2001, but fell back by 2.3 per cent last year as growth started to slow at home and internationally.

The contrast over the past year is even more marked, with a 7.7 per cent rise in the modern sector between January this year and the same month in 2002 - due to higher production from the chemical/pharmaceutical sector - and a 6.2 per cent fall from all other sectors.

The breakdown of the figures show a similar picture to trade figures published on Thursday, which showed a 9 per cent monthly drop in exports in January and a trend over the past year where the only sector showing strong growth was chemicals/pharmaceuticals.

Yesterday's figures show that production from the chemical/ pharmaceutical sector rose by 24 per cent last year compared to 2001. In contrast, production from the other big multinational sectors was weak, with office machinery and computers down 18.3 per cent.

In more traditional sectors, food production rose 3.7 per cent, but clothing and textiles dropped by 29.7 per cent.