The recovery in the manufacturing sector has continued into 2004, according to the January purchasing manager's index (PMI), which remained above the crucial 50-point mark for the fifth consecutive month.
However, the rate of improvement has slowed to a seasonally adjusted 52.2 from December's 52.6 and November's 18-month high of 52.8.
Exports rallied strongly, defying predictions that the strong euro has heavily eroded trade with the US and Britain, the NCB stockbrokers PMI shows.
"The overall index suggests that the economy maintained broadly the same pace of growth indicated since October," said Mr Eunan King, senior economist at NCB. "Output and orders, including export orders, continued to grow. Indeed, strong growth in orders from the US and Asia was cited as suggesting the strength of the euro is not an absolute impediment."
Despite continued expansion, the employment index languished below the 50-point mark dividing positive and negative growth for the second month in a row, at 48.7 from December's reading of 49.4. Such a figure suggested "marginal contraction" in the sectoral labour market, said NCB.
In contrast, the cost of doing business climbed further, with input prices up to 56 from 55.1 in December.
The new orders index was 54.8 from 55.3 in December, while the new export orders index was 54.4 from 56.2 in the previous month.
Manufacturers scaled back on production slightly: the output index went to 54.6 from 55.1
Purchase of stocks climbed for the fourth month running, reflecting rising production requirements. As a result of heightened demand for raw materials, further lengthening of average lead-times from suppliers was reported.
Meanwhile, the euro-zone's manufacturing sector grew a little faster in January thanks to buoyant worldwide demand, but the euro's strength forced companies to cut jobs to stay competitive, according to the euro-zone PMI. The survey of 3,000 companies showed overall manufacturing activity at a three-year high and robust growth in new orders.
However, manufacturers cut more jobs than they created, in an attempt to hold down their export prices by boosting productivity.
The index rose to 52.5 from 52.4, showing the sector growing at a stronger pace, albeit not as fast as the consensus forecast of 52.9. Job weakness held back the overall index.
"Recovery remains on track in the euro zone, but it seems to be losing some steam and this is likely to be because of the strong euro," said Mr Elwin de Groot at Fortis Bank in Amsterdam.
In Britain, the PMI was unchanged from December at 56.0 in January. The unchanged number broke a 10-month run of gains in the index and was slightly below forecasts of 56.1. Relative stability in the pound against the euro - even though it rose against the dollar - kept new export orders rolling in.
