Manufacturing activity grew by the sharpest rate in 15 months in October, prompting an increase in employment in the sector.

The rise in the NCB Purchasing Managers' Index (PMI) to 52.4 from 50.4 in September suggests a recovery in manufacturing after months of sustained decline, commentators said.

The upturn is attributed to a climb in output and new orders, which recorded the steepest increase since July 2002.

However, exports defied the trend to show a decline. While the dip was marginal, it pushed the exports index below the 50 point margin dividing positive and negative growth.

Companies surveyed by NCB said improved business confidence in the domestic market had fostered a renewal in demand for manufactured goods.

As a result, employment has risen for the first time in 14 months, with anticipated growth in business cited as a major reason.

"The latest manufacturing PMI provides clear evidence that recovery in the sector is becoming more solid," said Mr Dermot O'Brien, chief economist at NCB Stockbrokers.

"Of particular note in the latest survey is that improved business confidence has resulted in the first positive reading on manufacturing employment for 14 months," he added.

One consequence of increased activity has been a rise in demand for raw materials, which has pushed up input prices for the first time since March.

A breakdown of the data shows the new orders index at 52.6 in October, from 52.4 in September; the new order exports index at 48.2 from 51.6; the backlogs of work index at 45.8 from 46.3; the stocks of finished goods index at 46.1 from 46.7; and the employment index at 50.9 from 48.4

Output prices were up to 50.3 from 47.9 in September; input prices were 53.7, down from 54.2; the suppliers delivery times index was down to 46.4 from 50.9; and the quantity of purchases index was at 51.8, up from 47.4 in September.