Activity in the manufacturing sector grew at its slowest pace since May last month, the latest NCB Purchasing Managers Index has shown. Claire Shoesmithreports.

According to figures released yesterday, the index registered 52.3 in October, falling back from September's 14-month high of 54.4.

Still, despite the slowdown the index remained above the 50 mark - a level which separates growth from contraction. It has been above this level each month since September 2003.

Eunan King, senior economist at NCB Stockbrokers, said that overall the manufacturing sector appeared to be growing at a modest pace. He attributed the slowdown in part to September's surprisingly buoyant reading.

"The main components which grew less rapidly were output, new orders and stocks of purchases," he said.

"Employment, surprisingly against the slower growth of these items, accelerated somewhat to 51.9, the sharpest pace since February."

Growth in new orders slipped from 56.5 to 52.3, although the decline in export orders was not so pronounced, falling from 54.6 to 53.6. Companies reported solid demand from export customers, with new orders from abroad rising for the fifth month in a row.

Meanwhile, higher raw material and oil prices contributed to a sharp increase in input costs, which also caused output prices to rise for the 49th month.

Input prices registered 62.1 on the index, up from 60.8 in September, while output prices came in at 54.7, compared with 55.7.

Purchasing activity increased for the 26th month as firms responded to higher output requirements. However, input buying rose at the weakest rate since March 2006.

Staffing levels increased for the third month running as firms hired new people to support contract wins.