Ireland's manufacturing industry has expanded at its slowest level in three years. This reflects a slowdown in international markets, a cooling off in the domestic economy and the adverse effect of foot-and-mouth disease.

The NCB purchasing managers' index (PMI) - which gives an overview of the health of the manufacturing industry - registered 50.3 in April. A figure above 50 indicates growth, one below it signals contraction. The marginal increase was the weakest seen in the three-year history of the survey.

Slower growth in overall order books resulted from weaker demand from mainland Europe and the US. This was exacerbated by the negative impact of the recent foot-and-mouth crisis, which adversely affected food processors and associated services. The survey showed export orders increased at the second slowest rate since they began to rise over two years ago.

Manufacturers continued to purchase a greater quantity of raw materials in April but, in line with output and new orders, the rate at which manufacturers increased their purchasing activity was the slowest recorded by the survey to date.

The manufacturing sector is most exposed to overseas markets. About 80 per cent of Ireland's GDP, which grew at 11.5 per cent last year, is generated by exports.

This type of GDP growth could not be sustained, NCB chief economist Mr Dermot O'Brien said. He forecasts economic growth of between 6 and 7 per cent this year, which he said would be comfortably sustainable and achievable in the current environment.

"In Ireland the core boom is still intact," Mr O'Brien said, "but the froth is gone." He said this was a cooling off and should not be seen as a message of doom and gloom. Mr O'Brien said other sectors such as the services sector, the financial sector, construction and technology were all still buoyant.

The PMI index, which measures performance of 250 manufacturing companies, is seasonally adjusted.

Weaker demand for raw materials also helped depress the rate of input price inflation during the month. Shortages of certain commodities and high oil prices resulted in a further rise in average input prices. The overall rate of inflation was the lowest since July 1999.