Conditions in the manufacturing sector improved in December but the pace of progress slowed slightly, according to the latest NCB Purchasing Managers' Index, writes Una McCaffrey

The index - designed to measure the health of manufacturing companies - produced a reading of 53.4 last month, down from 53.7 in November. A reading above 50 signals expansion in the sector.

Eunan King, senior economist with NCB, said that while manufacturing continues to grow, expansion is not accelerating.

He pointed out, however, that new orders have shown steady growth over the last three months with employment also rising at a reasonable pace.

The NCB survey found that manufacturing employment rose for the fifth successive month in December.

This happened despite a rise in input price inflation, which reached its highest level in 12 months.

"Input prices remain firm and output prices are growing at a still-modest rate," said Mr King.

Firms responding to the survey said the December rise in new orders reflected both new buyers and higher spending by existing customers.

A number of companies also highlighted the introduction of new products over the month.

In response to the higher demand, manufacturing output expanded at a rate just slightly below the high of 56 recorded in November.

Companies also reported a "particularly sharp rise" in average costs in December, with many firms noting that high oil prices had driven up the cost of related items such as plastics and fuel.

Higher production levels meant companies needed to purchase more, with average lead times lengthening as pressure built on suppliers.

A breakdown of the employment sub-index showed that the rate of job creation was "marginal" last month, with almost four-fifths of respondents leaving staffing levels unchanged.

Firms that did hire new workers said they had done so to help deal with increased orders. They noted particularly strong demand from the UK and Spain.