Industrial activity continued to fall over the summer months with a 12.5 per cent fall in the three months to July, according to the latest data from the Central Statistics Office.

At the same time, industrial production was down 1.4 per cent across the euro zone in July. The year-on-year decrease in Ireland for July was 3.3 per cent, compared with a 14.8 per cent rise in June.

Mr Oliver Mangan, economist at AIB, says the figures have been erratic all year. "But there is no doubt that they are turning down and that activity is declining in both the multinational and indigenous sectors."

He added that from 1997 to 2000 industrial production was growing by 4 and 5 per cent every three months. But in the first quarter of 2001 it was only up 2.7 per cent, and was down 2.1 per cent in the second quarter.

The sharpest falls on a seasonally adjusted basis were in a broad range of areas. Chemicals and chemical products were down 13.2 per cent while office machinery and computers were down 22.5 per cent.

"The UK and the US have also seen sharp declines in these areas and we are even more exposed because of the number of US high-tech firms here."

But Mr Mangan said indigenous manufacturing had also been affected. "Beverages are down 10.4 per cent which may be related to the Harp plant in Dundalk while meat processing has also been very weak."

Euro-zone industrial production fell by 1.4 per cent in July, after a gain of 0.9 per cent in June and three consecutive monthly declines from March to May.

On a year-on-year basis, industrial production was down by 1.1 per cent after a rise of 1.8 per cent in June, the weakest performance since December 1996.