Manufacturing continued to grow in December but at the slowest rate in 21 months, according to the latest NCB purchasing managers' index.

The index of 250 companies, which provides a barometer of manufacturing conditions in the Republic, registered 53.3 in December, down from 53.8 in December. Readings above 50 signal continuing growth, while those below 50 signal contraction.

The slower rate of expansion largely reflected a further downturn in the growth of export orders, according to NCB.

"Growth is continuing, but has stabilised at a lower level," said Mr Dermot O'Brien, chief economist at NCB. "Everything is still indicating growth and there is nothing to suggest any major problems. The most important elements are still growing."

The latest expansion in Irish manufacturing reflected increases in output, new orders and employment, according to NCB.

Output rose significantly again in December, albeit at a slightly lower rate than was recorded in November. It added that the rise in output was largely in response to fuller order books during the month. The continued buoyancy of orders primarily reflected rising demand, although demand from abroad showed further signs of easing.

Despite continuing to rise significantly, the growth in export orders has slowed over the past two months as the benefit to exporters of the weak euro continued to be offset by an easing in demand growth from Britain, the US and continental Europe, NCB said.

Manufacturers increased their demand for raw materials to meet rising production requirements, according to the index. However, with output and orders growing at a slower pace, the rate of increase of purchasing also eased - dropping to a 22-month low. The strength of demand for inputs combined with shortages of certain commodities was nevertheless sufficient to lead to a further increase in delivery times during the month, NCB said.

The high price of oil and the weak euro continued to push up the cost of inputs in December. Raw material costs rose sharply during the month, although the rate of input price inflation dropped to a 16-month low due largely to a decline in the number of firms reporting higher fuel costs.