Decline in construction activity eased in August

While employment and purchasing activity in the Irish construction sector continued to fall in August, the rate of decline eased, according to the latest construction Purchasing Managers' Index (PMI) from Ulster Bank.

The seasonally adjusted index, which tracks changes in construction activity, signalled there was growth in activity in two of the three monitored sectors in August – housing and commercial. A second successive rise in activity on residential projects was the first back-to-back expansion since late 2006, while commercial activity rose for the first time in 19 months. Civil engineering remained the worst-performing sector, with activity continuing to fall sharply in August.

Despite the growth of new orders, construction firms in Ireland continued to lower their staffing levels during August, according to the report.

Sentiment among construction firms regarding the 12-month outlook for activity strengthened in August and was the highest since January 2007. Rising new orders was the main factor leading to optimism, while panellists also mentioned improving economic conditions.

Simon Barry, Ulster Bank's chief economist in the Republic, said: "The August results of the Ulster Bank construction PMI survey offered further encouragement on trends in the Irish construction sector, which continues to show signs of stabilising."