STERLING WEAKNESS and a decline in global demand contributed to a fall in new orders for Irish manufacturers as the sector declined for a 14th consecutive month in January.

The NCB Purchasing Managers’ Index (PMI) – which measures manufacturing activity – stood at 38.9 last month, marginally higher than the 37.9 in December, but still the third steepest decline in activity since the survey began in May 1998. Any reading below 50 marks contraction and the lower the number, the faster the pace of decline.

“Anecdotal evidence suggested that the global economic downturn was the principal cause of the [export] reduction, while there were reports that the relative strength of the euro compared with sterling had led to a fall in demand from the UK,” Markit, which compiles the survey, said in a statement yesterday.

Around 36 per cent of survey respondents said they cut jobs last month, while just 9 per cent said they increased employment.

The index of employment stood at 36.8 in January, marginally higher than the series low of 36.3 recorded in December. Output prices fell for the second month in a row and at the fastest pace since charges data were first collected in September 2002.

Chief economist at NCB stockbrokers Brian Devine said more than 47 per cent of respondents had signalled lower purchasing levels of raw material, with just 17 per cent indicating a rise.

“The wider economic downturn led to a further sharp reduction in new business over the month, while poor global economic conditions were largely behind the latest substantial fall in new export orders. There were also reports that the relative strength of the euro compared with the pound had led to less new business from the UK,” he said.

The volume of new orders also contracted in January as companies remained cautious about purchasing.

Despite easing for the second month in a row, the index of new orders stood at 37.5 last month.