Figures released by the Central Statistics Office show manufacturing output fell 2.5% in the three months to end October 2006 against 1.6% for total industrial output.
On an annual basis, total industrial output in October was 6.1% higher than in October 2005 while the increase for manufacturing was ahead by just 4.9%.
Bloxham Stockbrokers chief economist Alan McQuaid warned that the output figures for manufacturing contained bad news for the economy overall.
Despite changes in last week’s Budget to boost R&D and welcome changes in the BES scheme, Mr McQuaid said “manufacturing remains extremely vulnerable to increasing international competition and further job losses are likely over the next 12 months in our view”.
In 2005 Irish manufacturing lost 500 jobs a month to overseas competitors and that trend continued into 2006 as rising costs made it even harder for Irish firms to compete.
ISME, the representative body for small industry, said that from the year 2000 to August 2006 manufacturing has shed 30,000 jobs. A spokesman said losses this year could be as bad as 2005.
ISME head of research Jim Curran said it “has reached the stage where energy costs have replaced insurance as Irish industry’s major concern”.
“Energy is a step too far for many firms and it was no coincidence that 32% of all redundancies in the country this year have been generated by the Irish manufacturing sector,” he said.
Mr McQuaid said “anecdotal evidence suggests that the manufacturing sector is finding life increasingly difficult” as competitiveness issues result in the loss off further market share.
According to the latest Purchasing Managers’ Index, the Irish manufacturing economy expanded for the 39th consecutive month in November, he said.
But at 51.6, the seasonally-adjusted PMI index for November, designed to provide a single-figure measure of the economic health of the manufacturing industry, suggested growth over the month was pretty modest, he said.
Mr McQuaid said the statistics posed a challenge to the Government and Finance Minister Brian Cowen.
“The minister is well aware that we must act now to promote as many jobs as possible in the productive sector throughout the State, and investment in R&D is a key factor in retaining the country’s manufacturing base,” he said.