Ireland’s industrial production fell in August, dropping almost 7 per cent year on year and 1 per cent compared with the previous month, new data from the Central Statistics office said.

The sharp fall was driven by driven by declines in the modern sector, which is dominated by pharmaceutical firms that are being hit by patent expirations, harming output.

Production in the modern sector rose by 0.4 per cent on a monthly basis, but is down 11.4 per cent in the year to August.

“This volatility masks encouraging trends in the more labour-intensive ‘traditional’ sector, which is now up 3.4 per cent year-on-year in the three months to August, the fastest clip since early 2011,” said Davy Stockbrokers’ David McNamara.

The traditional sector grew by 0.9 per cent month on month.

Quarter on quarter, the seasonally adjusted volume of industrial production for manufacturing industries remained 2.5 per cent higher for the three months to August, the data showed.

Turnover in the industrial sector rose by 2.9 per cent month on month and fell by 2.8 per cent annually.

Merrion Stockbrokers’ Alan McQuaid said the figures “painted a mixed picture” for the manufacturing sector.

"Whatever about the near-term outlook, we still firmly believe that when the world economy regains momentum, Ireland is better placed than most to take advantage of that," he said. "However, on the basis of the figures for the first eight months of the year it looks as though manufacturing output for 2013 as a whole will post a low single digit decline for the second year running."