The Investec Manufacturing Purchasing Managers' Index rose to 53.5 in December from 52.4 in November, moving further above the 50 line dividing growth from contraction and recording the second-highest reading in almost 18 months.

"The latest manufacturing PMI report shows a solid finish to 2013 for the sector," said Investec Ireland chief economist Philip O'Sullivan.

"This purchasing behaviour, allied to firms continued willingness to add to payrolls and rising new orders, suggests that the positive momentum in the manufacturing sector in H2 2013 is likely to persist into the New Year."

Ireland's economy grew more than twice as fast as expected in the third quarter, data showed, tallying with three successive months of PMI growth that strengthened further in the final quarter of the year.

The new orders subindex rose to 54.5 from 51.4 in November in spite of the pace of expansion in new export orders slowing for a third successive month. The subindex measuring employment also rose for the seventh month in a row.

Dublin is counting on the domestic economy to spur on a tentative recovery next year as its usually robust export sector is struggling due to the mixed picture in Europe and the expiry of patents among the large cluster of pharmaceutical companies located in Ireland.

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(Reporting by Padraic Halpin; Editing by Hugh Lawson)