Manufacturing fell 1.7 per cent in the three months to April, compared to the previous three months, according to provisional figures released by the Central Statistics Office (CSO) yesterday. Barry O'Keeffe reports.

But the CSO said production for all industries was 2.7 per cent higher in April than in April last year.

The "modern" sector, which comprises technology and the chemical sector, showed an annual increase in production of 4 per cent. In contrast the "traditional" sector recorded a fall of 1.3 per cent.

Industrial turnover for manufacturing companies was up 5.3 per cent in the three months to April, compared to the previous three months. Turnover in April was 6.2 per cent higher than in April 2003.

Commenting on the figures Davy said that weaknesss in the basic chemicals sector so far this year is distorting the figure and that there has been a recent slowdown in production in that sector.

"The slowdown is linked to the high level of stock-building in basic chemicals in the second half of 2004," it said.

"Stripping out basic chemicals, production in the rest of the industry was up 6.4 per cent year on year in January-April."

Mr Jim Power, chief economist of Friends First, said the gradual improvement in overall industrial activity is not surprising given the steadily improving external environment.

"But it is clear that the Irish manufacturing sector has lost substantial competitiveness and this is undermining the overall performance," he said.