Manufacturing continued to contract last month although at a slower pace than in July as poor demand, a strong euro and job worries took their toll, data showed today.
The NCB Purchasing Managers' Index, which measures activity in the manufacturing sector, edged up to 44.9 in August from an all-time survey low of 43.4 the previous month.
The headline PMI reading first sank below the 50.0 mark that separates growth from contraction in December, after over four years of uninterrupted expansion.
"The slowing rate of contraction in the PMI index in August is welcome and is associated with some easing in input prices and a slowing rate of contraction in output, new orders and exports orders," said Eunan King, Chief Economist at NCB Stockbrokers.
"While today's release offers some comfort, the environment for manufacturers remains extremely challenging."
At 41.8, the employment index fell to an all-time low in August.
"There were reports that redundancies had been implemented as firms adjusted to lower new business volumes," said Markit, which compiles the survey. "Staffing levels have now fallen in each month since December 2007."
Most economists now expect a recession this year for the first time in 25 years with the number of jobless expected to rise and consumer confidence remaining weak.
The new orders index stayed weak at 44.1 last month from 41.8 in July.
"Anecdotal evidence suggested that deteriorating demand conditions in both Ireland and export markets had led to lower new business levels," Markit said.
New export orders also remained in contraction at 47.3 from 46.2 in July.
"In August, Irish manufacturers continued to report that the strength of the euro hampered efforts to win new export business," Markit said.
Compounding the difficulties for companies, the cost inflation index remained strong at 69.5 last month from 74.7 in July.
"Firms widely reported higher energy and metals costs," Markit said. "Prices charged increased at a robust pace as firms tried to protect margins in response to rising input costs."
Reuters