Optimism amongst Irish manufacturers dropped to a near three-year low in June, as manufacturing conditions deteriorated for the first time in six years amid heightening uncertainty over the nature of Britain's exit from the EU later this year.
While manufacturing production inched ahead last month, AIB's latest monthly index for the sector shows a solid contraction in new business orders; which have now fallen for two consecutive months.
Employment growth was also very modest and sat just above May's 32-month low.
"The sharp slowdown in manufacturing activity globally is now being felt in Ireland, amid a marked weakening in international trade and increasing uncertainty in regard to Brexit," said AIB chief economist Oliver Mangan.
"This is not surprising given that Ireland is a very open economy. The weak Irish reading is in line with that for manufacturing in our main export markets," Mr Mangan said.
For the second month in a row there was a significant decline in the backlog of orders, reflecting softer demand conditions.
Meanwhile, Britain’s private sector has had its worst three months in nearly seven years as the Brexit impasse and poor weather hit economic growth, the Confederation of British Industry has said.
After a surge earlier this year, caused by companies stockpiling ahead of the original March 29 Brexit deadline, private sector activity in the three months to June contracted at the quickest pace since September 2012.
The balance of firms reporting growth sank to -13%, according to the CBI’s monthly growth indicator.
Rain Newton-Smith, the CBI’s chief economist, blamed the weakness on the after-effects of the stockpiling rush, Brexit-related shutdowns in Britain’s car industry and bad weather.
“But underlying activity and confidence is clearly subdued,” she said.
“The UK economy is being stifled by uncertainty about the UK’s relationship with the EU. The need for the new prime minister to secure a deal with the EU is urgent.”