Output in the manufacturing sector experienced a further contraction last month, with unemployment hitting a record dip.

Figures from the NCB Purchasing Managers' Index, which measures Irish manufacturing sector activity, reported 44.9 for August.

This has increased slightly from July’s record slump of 43.4, however, any figure recorded below 50 indicates a fall in activity.

"The slowing rate of contraction in the PMI index in August is welcome and is associated with some easing in input prices and a slowing rate of contraction in output, new orders and exports orders," said Eunan King, Chief Economist at NCB Stockbrokers.

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Employment rates calculated by the index experienced a knock-on effect.

A new low of 41.8 was reported, with firms citing the fall in workload as a major factor influencing staffing needs.

"There were reports that redundancies had been implemented as firms adjusted to lower new business volumes," said report author Markit.

There was a decline in orders from both home and abroad, with the fall in demand attributed to the strength of the Euro.

"In August, Irish manufacturers continued to report that the strength of the euro hampered efforts to win new export business," Markit said.

However, companies’ expenditure on running costs did reduce, with the index falling from 74.7 to 69.5.

Dispite this "firms widely reported higher energy and metals costs" according to Markit.

Economist Mr King said in light of the new figures, which had offered "some comfort", the environment for manufacturing sector remained extremely tough.

(PR/JM)