Manufacturing growth has slowed again as the global economic slowdown begins to bite, according to the latest NCB purchasing managers' index.

Having picked up marginally in June, the indicator sank back to its May lows in July as manufacturing employment fell back for the first time.

The survey, carried out in association with the Irish Institute of Purchasing and Materials Management, also highlighted the lowest rate of input price inflation since raw materials costs began to rise in July 1999.

The index sank back to 50.2 in July from 50.9 in June and a high of 53.8 last November. The index is seasonally adjusted with readings above 50 signalling growth and those below 50 signalling contraction.

Weaker growth in both output and new orders subdued the index. However, the first fall in overall manufacturing employment and the fastest rate of improvement in suppliers' lead times had the most detrimental impact, according to Mr Dermot O'Brien, chief economist at NCB Stockbrokers.

He added that the setback was disappointing, particularly the indication that manufacturing employment had stopped growing. "The increasing impact of the global economic slowdown, as reflected in a sharp deterioration in export orders, seems to be the main cause."

Demand from overseas, particularly the US and Germany, declined for the third-month running in July and at the sharpest rate in the survey's history. The average cost of raw materials continued to rise because of the weak euro.