Fresh evidence of a recovery emerged yesterday as the latest purchasing managers' index (PMI) showed the fastest monthly growth since July 2002.

Buoyed by stronger orders from Europe, the NCB PMI rose to 52.8 in November, from October's reading of 52.5. It was the third month in a row that the index was above the 50 point mark dividing expansion and contraction.

An increase in orders from the Continent is helping fuel the rise said Mr Eunan King, NCB senior economist. Although the growth rate "isn't spectacular" it shows the economy is moving into recovery, said Mr King.

He said: "The index has now been above 50 for three months and the sustainability of the recovery would appear to be underpinned by the fact that it is partly based on stronger orders from some key European markets, which have been in the doldrums for some time."

New orders rose for the third successive month in November to 54.1 from 52.7 while new export orders rebounded after dipping marginally in October, to 53.5 from 48.4.

But the recovery has yet to filter down to the labour market. The employment index, while remaining above 50 points, actually slipped from October, to 50.5 compared to 50.9.

There was also an ominous jump in overheads, which increased by their highest rate since February, at 56.3 from 53.7 in October. Prices charged by firms climbed for the second month running, to 50.4 from 50.3.

At 52.8, the Irish PMI is ahead of the EU average of 52.2.

However, this may be slightly misleading as there is evidence that the Republic's economy is growing significantly faster than those of its European peers, said Mr King.

"There's no doubt that we are in recovery. But as these findings bear out it isn't all that dramatic at the moment," Mr King said.

Recovery rates in the Republic lag behind the US, he added.