ACTIVITY, NEW orders and employment all fell sharply in August, in spite of the respective rates of decline easing, the latest Ulster Bank Construction Purchasing Managers’ Index (PMI) has found.

The seasonally adjusted index, which is designed to measure the overall performance of the construction economy, rose slightly to 38.8 in August, from 37.9 in July.

Any figure below 50 indicates a contraction in activity. Although the rate of contraction eased to its slowest since November 2007, it was still substantial.

The fall in activity largely reflected a drop in new business.

Lynsey Clemenger, economist at Ulster Bank, said: “In terms of the sectoral breakdown, housing activity remains at a very weak level and continues to underperform, albeit that the rate of decline in August was the slowest in over two years.

“Interestingly, from a forward-looking perspective, the expectations component of the index remained above the 50 level for the third month running, as constructors continued to take the view that economic conditions over the next 12 months will improve.”

For the second consecutive month, activity on residential projects fell at the sharpest rate of the three monitored areas. This was despite the pace of reduction slowing to its weakest in 27 months. Activity on civil engineering projects fell substantially in August, and at a steeper pace than in the preceding month.

Ulster Bank found that there continues to be a reduction in employment in the construction sector. The latest round of redundancies was the 28th in succession and was “severe”.

Purchasing activity declined at a considerable pace in August, in line with falling new orders.