DUBLIN, Sept 1 (Reuters) - Production at Irish manufacturing firms contracted at the slowest pace in a year in August but demand for new orders deteriorated further, a survey showed on Tuesday, ruling out hopes for an imminent broad-based recovery.
The NCB Purchasing Managers' Index (PMI), which measures Irish manufacturing activity, rose to 44 from 43.7 in July after the rate of job cuts and decline in output and export orders slowed.
The index, however, was still below the 50 mark separating growth from contraction.
Ireland's exports have held up relatively well in the face of a global slump due to its large pharmaceutical and chemicals sector, which are relatively recession-resistant.
In June, Irish exports rose five percent compared with a 1.4 percent increase in the exports of Britain, one of its biggest trading partners.
But the pharma industry's resilience is relatively unique and in the absence of a general pickup in consumer demand, Ireland's manufacturing sector remains stuck in a downward spiral.
"While Irish industrial output and Irish merchandise exports have been buoyed by the particularly impressive performance of the chemical and pharmaceutical sector, the reality is that most other sectors have struggled," said Brian Devine, economist at NCB Stockbrokers.
"A more broad-based improvement in manufacturing is needed to boost the Irish economy."
The PMI's new orders component fell to 43.4 from 43.9, marking a slightly faster rate of contraction than in the previous month in the face of falling demand, said Markit, which compiles the data.
Unemployment levels are expected to keep climbing in Ireland and the prospect of further pay cuts will likely keep a firm lid on consumer spending, which accounts for around 60 percent of national income.
The Irish economy is expected to be one of the worst performers in the industrialised world this year with the OECD estimating a fall in gross domestic product of 9.8 percent.
The government is hoping the creation of a "bad bank" to deal with the legacy of a spectacular local property crash will restore the flow of credit and help revive the economy.
Data on Monday showed the fall in lending to Ireland's private sector accelerated in July as banks took increased charges for bad and doubtful debts. (Reporting by Carmel Crimmins; Editing by Andy Bruce)