Ireland's manufacturing sector contracted for the second month in a row in January, according to a survey published this morning.
The NCB Purchasing Managers' Index (PMI), which measures Irish manufacturing activity, fell to 46.4 in January from 49.5 in December and to the lowest point since July 2003 when it stood at 45.8.
The index showed falling new orders and the worst employment reading since records began in May 1998.
It was the second month in a row that the reading has been below the 50.0 mark that separates growth from contraction following over four years of uninterrupted expansion.
"The PMI report for January paints a deteriorating picture of the manufacturing sector," said Eunan King, senior economist with NCB Stockbrokers.
Mr King said the 42.5 reading for employment, down from 49.2 in December and an expansionary 51.7 in November, suggested a "sharp downward adjustment in activity".
"Exactly a quarter of panellists reported a reduction in staffing levels, with anecdotal evidence suggesting that firms had acted in response to reduced order levels and efficiency gains," said NTC Economics, which compiles the survey.
The level of new orders fell to 46.4 in January from 48.8 in December and was at its lowest since July 2003.
New export orders showed a slight improvement, however, rising to 50.4 from 50.1 in December.
Manufacturers were also hit by rising world food and fuel prices as the input prices sub-index rose above the average for 2007 to 63.8 from 60.0 in December.