EXPORTS CONTINUED to drive the manufacturing sector in January, as output rose at its fastest pace in more than 10 years.

NCB Stockbrokers Purchasing Managers’ Index (PMI) said “substantial” production growth was recorded last month, with new orders surging and growth in purchasing activity the strongest in 11 months.

The overall index rose to 55.8 in January from 52.2 in December.

“This signalled a marked improvement in operating conditions in the sector and the strongest since April 2000,” the report said.

Readings above 50 signal growth.

The Irish reading was reflected elsewhere, with manufacturing activity across the euro zone accelerating more than previously thought last month. The US reported activity growing at the fastest pace in six years.

In Ireland, new business rose at a sharper pace as weather conditions improved, while new export orders recorded the third-fastest rise in the series history.

The production index rose to 59.0 from 53.1 a month earlier, while new orders were 58.8 from 53.2.

Employment was also up, the second month in a row it increased, but industrial employment in Ireland accounts for only 13 per cent of total employment.

“We expect total employment to contract once again in 2011 on the back of weak domestic demand,” NCB said.

Greece was the only exception to accelerated growth across the euro zone last month.

The Markit Euro zone Manufacturing PMI rose to 57.3 in January from 57.1 in December, which exceeded an earlier flash estimate of 56.9.

– (Additional reporting: Reuters, Bloomberg)