Activity in the manufacturing sector deteriorated for the first time in six years through June, as inflows of overall new business fell for the second month running.

The AIB manufacturing PMI for June declined to 49.8 from 50.4 in May and 52.5 in April.

According to the June PMI, the rate of contraction of new orders was solid and the fastest since January 2012. Businesses attributed the fall to softer demand conditions and ongoing Brexit uncertainty.

Meanwhile, inflows of new work from abroad increased in June, reversing May's first decline since August 2016

Production also inched up, and manufacturers raised their holdings of finished goods at the second-fastest pace recorded by the PMI in its 21-year history, amid hopes of a pick-up in customer demand in the future.

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Brexit uncertainty contributed to sentiment regarding output over the coming year easing to a 34-month low in June.

Close to 45% of the survey panel indicated positive output expectations, against just over 9% that forecast lower production. Predictions of greater customer orders, a recovery in foreign markets and improved marketing efforts were cited as reasons to be optimistic.

Oliver Mangan, AIB’s chief economist, said that the sharp slowdown in manufacturing activity globally is now being felt in Ireland, amid a marked weakening in international trade and increasing uncertainty in regard to Brexit.

"The weakness in the headline Irish PMI number is reflected in the various components of the survey. Although output rose marginally, there was a marked decline in new orders, partly due to Brexit uncertainty.

“For the second month in a row, there was a significant decline in the backlog of orders, reflecting softer demand conditions. Meanwhile, stocks of finished goods accumulated at a fast pace. Employment growth was very modest, at just above May’s 32-month low."