Production in Irish manufacturing industries rose by 1.7 per cent in the year to January, its worst year-on-year performance since last April.

The increase was driven by a 9.6 per cent rise in the volume of computer and electronic goods produced compared to a year ago. This was partially offset by a 6.8 per cent decline in the volume of food products produced in January compared with the same month in 2010.

The high-tech modern sector saw production rise by 1.5 per cent year on year, while the traditional sector grew by 1.2 per cent.

"Even allowing for some adverse exchange-rate movements since the beginning of last July, it does now look like the 'indigenous' sector has become more competitive and found a solid footing, which suggests a positive year ahead. Indeed, the Irish Exporters Association is quite bullish on the prospects for the agri-food sector over the next decade or so," said Bloxham's chief economist Alan McQuaid.

Mr McQuaid said the principal constituents of the modern sector - chemicals and pharmaceuticals - have returned to more stable growth levels.

"Growth momentum in the sector is now more evenly balanced between these two components. However, the "Modern" sector remains wedded to the fortunes of these two components both in value-added and output volume terms, in contrast to those of computers, electronics and electrical equipment which remain stubbornly weak," he said.

In the three-month period from November to January, the seasonally adjusted volume of industrial production for manufacturing industries was down 0.4 per cent when compared with the preceding quarter. This was marginally higher than the total industrial output, which fell by 0.3 per cent over the period.

The seasonally adjusted industrial turnover index was up 0.9 per cent over the three-month period. Turnover in January was 6.4 per cent higher year on year.

Bloxham predicted a large single-digit increase in the volume of manufacturing output in 2011

"A strong manufacturing production/export performance will provide the platform for a sustainable Irish economic recovery over the next few years," Mr McQuaid said.

Business group Ibec said 2011 looked like it would be a "buoyant" year for manufacturing output, despite the slowdown in growth.

The group's senior economist Reetta Suonperä said it seemed on initial examination that manufacturing got off to a relatively weak start for the year, but there was a recovery in volumes last year.

"The data may also show some delayed effect from the bad weather conditions at the end of 2010; there was no impact evident in the December production figures and it would be surprising if the adverse weather had no short-term impact on output."