Annual production fell in July as the slowdown in the global economy and dwindling demand weighed on the manufacturing sector.

The data showed a fall in volume of 6 per cent overall in the year to July 2011, with the largest percentage decrease recorded in the “modern” sector. The sector, which includes high-technology and chemical industries, saw production decrease by 7.3 per cent on an annual basis, and was outperformed by the “traditional” sector, which declined by 3.8 per cent.

Bloxham chief economist Alan McQuaid described the latest figures as "disappointing".

"These latest figures are disappointing and are clear evidence that manufacturing output is coming under pressure from the slowdown in the world economy and the fall off in global demand," he said. "One would expect this to be reflected in Ireland’s export performance in the second half of the year."

Ireland’s recovery has been heavily dependent on the export market as domestic demand remains weak.

The seasonally adjusted turnover index fell by 2.6 per cent compared to July last year.

In the three months to July 2011, the seasonally adjusted volume of industrial production for manufacturing industries fell by 0.3 per cent compared to the preceding quarter.

“When compared to the strong performance of the industrial sector in the second half of 2010 and the healthy average growth rate in manufacturing output of 8.3 per cent for last year as a whole, the figures in 2011 to date are somewhat disappointing, and a lot will depend on what happens to the world economy and global demand in the next few months," Mr McQuaid said.

"But the omens don’t look too good at the moment."