The industrial sector gained strong momentum in the opening months of the year, with production volumes increasing at the fastest rate in over four years.

The latest data published by the Central Statistics Office shows that industrial production in the three months to March was 11.8 per cent higher than in the previous quarter.

The figures indicate that manufacturing was a particularly buoyant industrial sector, with production volume growing by close to 13 per cent in the first quarter.

A breakdown of the overall industrial sector shows that the "modern" sector - which comprises a number of high-tech and chemical industries - provided the main impetus behind the latest upsurge in activity.

The modern sector recorded a year-on-year increase in production in March of 12.1 per cent, compared to just 4.4 per cent in the "traditional" sector.

Within the modern sector, chemical production was the driving force, showing a 21 per cent quarterly increase.

"It is encouraging to see the higher value add activities making the greatest contribution to the upswing in industrial production, while chemicals exports should also benefit in the coming months from these high levels of activity," said Deirdre Ryan, of Goodbody Stockbrokers.

However, Alan McQuaid, of Bloxham, warned that output within the chemicals sector could be "extremely volatile" due to the small number of large companies.

"With global growth likely to be strong again this year, demand for Irish goods should remain reasonably healthy over the next 12 months, although a lot will depend on what happens on the inflation and exchange rate fronts."

However, Mr McQuaid said the substantial build-up in industrial stocks during 2006 might impact on output in the coming months. Nevertheless, he expected both manufacturing and total industrial production to grow by an average of 6 to 8 per cent this year.