The Irish construction sector may be approaching a point of stabilization as total activity in construction firms fell only marginally in December, while new orders rose.
The Ulster Bank Construction Purchasing Managers' Index (PMI) posted a reading of 49.9 last month. Any figure over 50 signals expansion in a sector, while under 50 signals contraction. The December reading was the highest since May 2007.
The December figures also point to a slight increase in housing activity, the first time the survey has pointed to a rise since October 2006. The housing index rose to 52.3 in December from 46.6 in November. The rate of decline in the commercial sector eased for the fifth month in a row with the index showing a reading of 49.8 from November's figure of 49.
However, activity in the civil engineering sector contracted again at a sharp pace and continues to under-perform the rest of the market. The indicator for this sector showed a reading of 42.9 in December compared to a reading of 39.7 in November.
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Ulster Bank said that new orders rose for the second time in three months and at the sharpest pace since March 2007. But construction firms continued to cut jobs last month, suggesting that the rise in new business was not enough to prevent space capacity existing within the sector.
The bank also noted that the level of positive sentiment among construction companies improved for the second month in a row and was the highest since August.
''The December survey featured several encouraging developments including that the overall PMI rose to its highest level in over four and a half years,” commented Ulster Bank's chief economist Simon Barry.
''Our overall take on these latest results is that they offer some heartening evidence that, after an extraordinarily severe downturn which has lasted over four and a half years, the Irish construction sector looks to be in the early stages of a bottoming out process,'' he said.
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