Manufacturing activity performed strongly in January, strengthening the sector's recovery from a weak performance last year.

While describing the figures as a positive start for 2007, Bloxham chief economist Alan McQuaid said that traditional Irish-owned manufacturers were continuing to underperform their more modern foreign-owned counterparts.

According to the Central Statistics Office's latest index of industrial production, manufacturing output rose last January by 7 per cent, when adjustment is made for seasonal fluctuations. January's outcome followed a strong performance in December, pushing output over the November-January period 5.6 per cent above output for the preceding three months.

In year-on-year terms, output was 9.0 per cent higher than in January 2006; the closeness between the monthly and annual growth rates reflecting declines in output during autumn 2006.

A performance breakdown suggests that manufacturing growth continues to be dominated by the modern sector of more high-technology and foreign-owned firms, typically in the computers or pharmaceutical subsectors.

In the traditional sector - which comprises one-third of output but two-thirds of employment - output rose annually by 5.6 per cent in January, compared to 10.3 per cent for remaining firms in the modern sector.

"Over the 2000 to 2006 period, traditional sector growth averaged 1.8 per cent, compared with average growth of 9.1 per cent in the modern sector," Mr McQuaid said yesterday.