The pace of manufacturing growth has fallen to its lowest level in 18 months, according to the latest NCB purchasing manager's index.
The index of 250 companies, which provides a barometer of manufacturing conditions in the Republic, registered 53.4 in September down from 54 in August. Readings above 50 signal continuing growth, while those below 50 signal contraction.
Output, new orders and employment all rose significantly during the month, but in each case the rate of increase slowed, according to NCB. Growth of output slowed for the fifth month running to register the weakest monthly increase since the survey began in May 1998. The output index fell from 54.5 to 53.6.
Meanwhile, the rate of growth of new orders remained well down on that at the start of the year, resulting primarily from an easing in the export order-book growth to an 18-month low, said NCB. In contrast, domestic demand was reported to have remained robust, it said.
Although manufacturers continued to benefit from strong European economic growth and raised competitiveness outside the euro zone due to the euro's weakness, export orders were subdued by a further downturn in demand from UK manufacturers, NCB said.
"The slowdown can be attributed to slower export orders from the UK. This seems to be the key factor slowing the pace of growth," said Mr Dermot O'Brien, NCB chief economist.
Weaker demand from the UK was due primarily to sterling's strength, he said.
The overall new orders index fell to 54.3 from 54.6 in August, while the new export orders index fell to 51.3, down from 53.6.
But despite the slowdown, the manufacturing economy has continued to expand, said Mr O'Brien. "It still looks quite upbeat, particularly in terms of domestic demand and demand from the euro zone." And while the evidence would suggest the slowdown is more than a blip, the index represents a "cautionary note rather than an alarm bell", he added.
The volume of goods purchased rose at the slowest rate since March 1999, reflecting the lower production requirements in many firms, said NCB.
But it said the survey again found evidence of manufacturers building stocks of certain inputs to safeguard against possible price rises. As a result, stocks of purchases rose for the fourth month running.
Fears of future price rises were driven by a further sharp rise in average input prices in September, said NCB. The price of oil, which hit a 10-year high at the time the survey data were collected, was primarily blamed by manufacturers for the sharp rise in costs. High import prices due to euro weakness and firm commodity prices due to strong global demand were also commonly reported, said NCB.
But although up on August, the rate of input price inflation remained below the peak of 72.5 seen in May. Stocks of finished goods rose slightly in September for the second month running, reflecting the slower growth of sales in recent months. Although continuing to rise at a significant rate, employment growth hit a 14-month low. The employment index fell to 52.8 from 53.5.
