The rate of growth in manufacturing in the Republic slowed in February as the international slowdown started to take its toll, the latest NCB purchasing managers' index shows.

Although the manufacturing economy continued to expand, the rate of growth was the slowest recorded since January 1999, mainly because of a slowdown in export activity.

The index, which is derived from a survey of 250 manufacturing companies in the Republic, registered 52.1 last month, down from 53.5 in January. Readings above 50 signal continuing growth while those below 50 signal contraction.

Faltering demand from abroad, particularly from the US, Britain and mainland Europe - the Republic's main export markets - was the main reason behind the slowdown in the pace of expansion after five months of stability, NCB chief economist Mr Dermot O'Brien said.

"Export activity has weakened again and is teetering on the brink between expansion and contraction," Mr O'Brien said. The export orders index stood at 50.1 in February, just above the key 50 level and down from 52.2 in January.

While manufacturing output rose last month, returning an index measurement of 53.0, the rate of output growth was the slowest recorded in the 34month history of the survey.

On the positive side, the index showed a continued easing in price pressures, NCB said.

Average input prices rose for the 20th month in succession but, although prices remained strong, the rate of input price inflation was the lowest seen for a year and a half. NCB said this was partly due to the modest recovery of the euro at the beginning of the year and lower oil prices.

Continuing the trend seen since the survey began in May 1998, manufacturing employment rose again last month, with nearly 10 per cent of all respondents reporting higher employment levels. However, the rate of increase of employment was the slowest recorded by the survey to date, partly reflecting the difficulties faced by many companies in recruiting, Mr O'Brien said.