Employment in the manufacturing industry has dropped for the first time in a year, due partly to the transfer of production to eastern Europe, the latest data has shown.

According to the latest NCB purchasing managers' index (PMI), employment declined "marginally" in March, following growth in the previous 11 months.

NCB said firms participating in the survey attributed the decline in staff numbers to "natural staff wastage" and, in certain cases, the movement of production to eastern Europe.

The employment index fell from 51.9 in February to 49.1 last month. Any reading above 50 represents an increase in staff.

However, the overall PMI reading - a monthly snapshot of the economic health of the manufacturing sector - was 51.7 last month, indicating that the industry is continuing to expand, although at a slower pace.

Manufacturing output rose for the 43rd successive month, registering 54.8 on the index reading. This robust growth was boosted by new order gains and improvements in efficiency.

New order volumes have now increased each month since September 2003, although at a reading of 52, the increase was the weakest in almost two years.

Marked inflation was evident in the prices charged by Irish manufacturers last month, as higher input costs were passed on. Order backlogs declined once again in March, as a result of increased efficiency.

Meanwhile, British manufacturing activity expansion slowed in March from a 2½-year high, but overall growth in output and new orders remained robust, a survey showed yesterday. The Chartered Institute of Purchasing and Supply/Royal Bank of Scotland PMI fell to 54.4 last month from 55.4 in February. Analysts had predicted a less steep drop to 55.1.