Manufacturing activity has continued to slow in November with the Purchasing Managers' Index compiled by NCB Stockbrokers recording further contraction.

The index came in at 46.4 per cent, well below the no-change mark of 50, reflecting the fourth consecutive easing in the Irish manufacturing sector, according to NCB.

The index did, however, record a slight rise from 46.1 to 46.4 in October, indicating a marginal easing in the rate of contraction in the sector.

NCB chief economist Mr Eunan King said the findings offer the first signs in recent months that the deteriorating situation may be easing. "The indicators for orders, in particular export orders, provide the clues that the climate has stopped accelerating downwards," he said.

The lack of incoming orders continued to be the main problem facing manufacturers in November. New orders fell once again largely because of the global economic slowdown.

In response, manufacturers revised production levels downwards while others deliberately ran down current stock. The subsequent fall in demand for raw materials, together with a further drop in oil prices, also triggered a significant drop in the average price of inputs.

At the same time manufacturers continued to cut costs and limit their exposure to the global economic slowdown.

Employment levels were also trimmed for the fifth consecutive month. NCB reports that November had the most aggressive round of job shedding since its survey began in May 1998.

Manufacturing output across Europe also shrank last month but a small rise in a Reuters index series offered some hope of recovery.

The index has been on a downward trend since May 2000, but rose to 43.6 in November from October's low of 42.9 per cent. The outturn is still well below the 50 no-change mark.

Figures released yesterday also showed that Britain's manufacturing sector activity contracted at its fastest pace for nearly three years in November, dashing hopes that the worst was over for the UK's beleagered manufacturers.

The report, compiled by the Chartered Institute of Purchasing and Supply (CIPS), showed the overall manufacturing activity index slumped to 45.6 in November from a revised 46.5 in October.

It was the lowest activity reading since January 1999 and the ninth successive month that the index has been below the critical 50 level, signalling decline compared with a year ago.