A key survey of manufacturing gave some grounds for optimism yesterday as one of its components showed firms benefiting from a pick-up in export orders which helped drive new business growth for the second month on the trot in December.
However, overall manufacturing activity continued to fall in December as the NCB Purchasing Managers' Index (PMI) for the sector remained stuck at November's reading of 48.8, just below the 50 mark separating growth from contraction.
And after recording a positive result in November, the sub-index measuring output fell back into negative territory in December, the NCB reported.
But there was at least some good news with the measure of new orders expanding for the second month in a row, a trend which NCB economist Brian Devine said reflects the growing momentum in global economic activity.
Mr Devine said the decline in overall output largely reflected the fragility of the wider Irish economy.
"The challenge for the Irish economy is to create vigorous growth in services employment, as this is what will be needed to drive a sustained improvement in economic conditions," Mr Devine added.
He said economic activity is likely to get off to a slow start in the early days this year as inclement weather weighs on retail activity.
Across Europe the picture was a bit better, with the manufacturing industry expanding for a third month in December after a pick-up in global trade helped the euro region emerge from recession.
An index of manufacturing, based on a survey of purchasing managers in the 16-nation euro area, rose to 51.6 from 51.2 in November, London-based Markit Economics said.
"It looks like manufacturing will continue to expand in the coming months as companies replenish stock, led by Germany and France," said Martin van Vliet, an economist at ING Groep NV in Amsterdam.
Meanwhile, in Britain, a separate survey showed that manufacturing activity expanded at its fastest pace in more than two years in December.