Activity in the manufacturing sector improved in February amid a rise in new orders, according to the latest AIB Purchasing Managers Index (PMI).
After a period of weak activity over the winter months, the PMI moved back into expansion mode.
The index rose to 51.3 last month from 50.1 in January and 48.7 in both December and November.
Readings above 50 indicate overall growth in activity.
One of the main reasons for the improvement in the sector was the first rise in new orders since last May.
Output also stabilised, having contracted in eight of the previous nine months.
Increasing order books helped employment expand for a third consecutive month and at the quickest pace since last June.
Planned company expansions was another factor supporting recruitment endeavours, the data shows.
Oliver Mangan, AIB’s chief economist, said there was further evidence of spare capacity in Ireland’s manufacturing sector in February.
“Order backlogs continued their steep decline for a tenth month in a row,” he said.
“Firms also cut back sharply on the volume of inputs purchased, while stocks of finished goods were broadly stable,” he added.
The data also shows that there was a further easing in inflationary pressures, especially for inputs, where the rate of increase slowed to its lowest level since December 2020.
“The rise in output prices was the smallest in almost two years,” Mr Mangan pointed out.
“That said, prices are still rising, with firms reporting further increases in raw material, energy, transport and labour costs, which they are passing on in higher selling prices to customers,” he added.
Despite this, the data suggests that Irish manufacturers are becoming increasingly upbeat, with sentiment about the outlook for the coming 12 months climbing to its highest level in the past year.