The manufacturing sector slipped into stagnation in June, according to new figures from the Central Statistics Office (CSO).

The seasonally adjusted numbers show that industrial production dropped back by 0.6 per cent over the month.

The decline followed weak growth in May and shrinkage in each of the previous two months.

The figures reflect the sluggish conditions faced by manufacturers, who have come under pressure from the strength of the euro and high domestic costs.

Redundancy numbers issued last week reinforced concerns about the health of the sector, with almost 6,500 manufacturing workers told to prepare for job loss so far this year.

Unadjusted production numbers, also released yesterday, appear to underline the slump, with activity 0.8 per cent slower in June than in the same month of 2002. It should be recognised, however, that much of this fall is attributable to a surge in production last summer. In June last year, activity grew by 13.6 per cent on an annual basis.

Quarterly numbers prepared by the CSO are slightly more positive, pointing to a 1.3 per cent rise in production in the three months ending in June.

Industrial production releases are notoriously volatile, however, with the transfer-pricing policies of multinationals operating in the Republic blamed by commentators for skewing trends.

The June release is meanwhile based on early survey returns received by the CSO and is, therefore, open to revision over coming weeks.