Up to 35,000 jobs could be lost in domestic manufacturing companies this year, according to a report published yesterday.

The Irish Small and Medium-sized Enterprise (ISME) association warned in its latest business trends survey that the indigenous sector was going through a protracted downturn that would continue for the foreseeable future.

ISME said that one-third of firms surveyed employed fewer staff than last year, while 18 per cent had increased workforces.

"The manufacturing sector continues to bear the brunt of job losses with 38 per cent of companies shedding jobs in the last year, in comparison to 29 per cent of service companies and 32 per cent of distributors," ISME said. "The trends are in line with ISME's forecast of job losses topping 35,000 by year-end."

ISME chief executive Mr Mark Fielding said, if there was no substantial improvement in the State's competitive position, one-third of manufacturing firms could close over the next three years, with the loss of 100,000 jobs.

The survey also found that there was a widespread fall-off in turnover and companies' order books this year. Almost half the businesses surveyed said orders were down, while 44 per cent reported a slide in turnover.

Businesses also continued to experience inflationary pressures, ISME said.