Activity in the country's manufacturing sector grew at the fastest rate in nearly three years in March as the economy gains steam after completing an international bailout in late 2013.

The Investec Manufacturing Purchasing Managers' Index moved up to 55.5 in March from 52.9 in February, hitting its highest since April 2011.

The PMI has now stayed above the 50 line dividing growth in activity from contractions for the 10th month in a row.

Today's index shows that manufacturing companies recorded a ninth successive rise in new business last month, while the rate of growth accelerated for the second month in a row to the sharpest in almost three years.

New export orders also saw a marked increase in March, and the latest increase was the strongest in five months. Companies reported improved demand from a range of markets including the UK, US and Asia.

The PMI sub-index measuring employment slipped to 54.6 from 54.9 in February, but also marked its 10th consecutive month of growth. The increased headcount was due to higher new orders and efforts  by firms to prepare for expected future growth.

Investec said that the rate of input cost inflation eased for the third month in a row in March and was the slowest in the current eight month period of rising prices. Where input costs did rise, companies said this was due to rising prices for timber and paper.

Philip O’Sullivan, Investec Ireland's chief executive, said that one of the highlights of today’s release is the improvement in new orders, where a ninth successive monthly increase was registered in March, while, as with the headline reading, the rate of increase in new orders accelerated to the fastest pace since April 2011. 

"With a tenth successive above-50 reading being a nice milestone for the Manufacturing PMI report, the key takeaway from the above is that the recovery both at home and in Ireland’s major trading partners will underpin further expansion in the months ahead," the economist said.

Manufacturing accounts for about a quarter of Irish gross domestic product, according to World Bank figures.