The manufacturing sector is having to contend with record inflationary pressure as both input and output prices increased at the fastest pace in a quarter of a century.

The AIB Purchasing Managers Index, a monthly measure of activity and sentiment in the sector, recorded higher costs driven by raw materials, components, energy, fuel and transport charges and general market volatility.

Uncertainty due to the war in Ukraine has also impacted on performance, the report noted.

Around 88% of manufacturers reported higher input prices.

However, the report also captured a marked overall improvement in manufacturing business conditions.

The headline Manufacturing PMI is a composite single-figure indicator of manufacturing performance derived from indicators for new orders, output, employment, suppliers' delivery times and stocks of purchases.

The PMI rose from February's 11-month low of 57.8 to 59.4 in March.

Any figure greater than 50 indicates overall improvement of the sector.

Conditions have improved every month since October 2020.

Demand for Irish manufactured goods strengthened in March, as new orders rose at the fastest rate since August 2021, with the pace of growth being among the highest on record.

However, that level of demand partly reflected advance ordering by customers due to ongoing supply chain uncertainty and fears over rising prices, exacerbated by the Russian invasion of Ukraine.

New export growth moderated compared with February as some firms reported increased caution among international customers.

Meanwhile, employment rose at the strongest rate in seven months, boosting production capacity.

"There are three clear messages that can be gleaned from the Irish PMI manufacturing data for March - continuing strong growth in activity, a weakening of sentiment on the outlook for business and very elevated inflationary pressures," Oliver Mangan, AIB chief economist, explained.

"In terms of the current environment, March saw a pick-up in new orders and output growth, partly reflecting advance ordering by customers due to ongoing supply chain uncertainty and fears over rising prices, exacerbated by the Russian invasion of Ukraine," he added.

Noting that inflation had picked up to its highest level in the 24 year history of the survey, Oliver Mangan pointed to the near nine of ten respondents who reported higher costs in the month including increases in fuel, energy and transport costs.

"Faced with surging input prices, manufacturers raised their own prices by a survey-record degree in March," he added.