Manufacturing industry recorded its strongest performance for four months in August, according to the latest NCB Purchasing Managers' Index.
The PMI climbed to 48.1 from 45.1 in July, though it still remains below the 50 point no-growth mark.
A key driver was a record slowing in the rate of decline of new orders, reflecting marginal weakening of the euro against the US dollar.
While production levels continued to be scaled back, the rate of decline in output was moderate at 49.2 from 46.1 in July , the lowest during the current downturn.
Input prices were up marginally for the first time in four months. This was blamed on the weaker euro and a rise in agricultural prices following a spell of hot weather.
New orders declined for the eleventh successive month by volume, pushing the index to 48 from 43.9 in July. The new export order index fared less well, at 46.3 from 44.6. The work backlog index was 44 from 40.7.
Meanwhile, Irish manufacturers cut prices for the fifth month running in response to heightened competition , particularly from overseas. However, firms continued to lay off workers, although the rate of job shedding was the slowest for seven months.
The figures suggest a recovery may be on the way, said Mr Eunan King, senior economist at NCB stockbrokers. He added: "The ... index, while still below the 50 level, shows a marked bounce to the highest level since April. This would appear to be in response to an improving situation both in the domestic and foreign economies. Output prices remain soft but input prices recorded a marginal firming."
The brighter outlook is echoed in the latest PMI for the euro zone.
