U.S. manufacturing growth quickened in March and the pace of hiring increased, suggesting the sector will contribute to stronger overall U.S. growth in the first quarter, an industry survey showed on Thursday.

Financial data firm Markit said its ``flash,'' or preliminary U.S. Manufacturing Purchasing Managers Index increased to 54.9 this month from 54.3 in February.

A reading above 50 indicates expansion. 

Manufacturers stepped up hiring this month, driving the employment sub-index to 54.6 from 53.5 and rounding out the best three-month stretch for hiring in the sector since early last
year, according to Markit chief economist Chris Williamson.

"With manufacturing a reliable bellwether of the rest of the economy, gross domestic product will have risen at a much improved rate'' over the first three months of 2013, he said.

The U.S. economy grew at a 0.1% rate in the fourth quarter of 2012, but economists are forecasting a first-quarter growth rate of about 2%.

The manufacturing output index eased to 56.8 in March from 57.3 the prior month, but the pace of incoming orders from domestic customers increased, while overseas demand grew slightly after contracting in February.

The "flash'' reading is based on replies from about 85% of the U.S. manufacturers surveyed. Markit's final reading will be released on the first business day of the following month.