Last month's record low temperatures served to 'freeze' much of Ireland's construction activity as it decreased at its fastest rate in almost two years.

Last month, according to the Ulster Bank Construction Purchasing Managers' Index, civil engineering across the whole of Ireland - north and south - was particularly weak, commercial activity also declined at a more rapid pace and while the pace of decline in housing eased, homebuilding is still contracting.

The construction sector faced two areas of difficulty last month - the underlying weakness of the economy and the unprecedented cold snap.

The December extreme temperatures also saw shoppers staying indoors during the crucial pre-Christmas season.

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The Ulster Bank's Chief Economist for Northern Ireland Richard Ramsey said there had been a decline in manufacturing output and new orders as well.

"The extreme weather conditions that prevailed last month have undoubtedly exaggerated the true underlying business performance within Northern Ireland," he said.

"All UK regions, to a greater or lesser degree, have been affected by the weather with Scotland appearing to be the region hit hardest."

Its record monthly fall in its business activity index has seen Scotland displace Northern Ireland at the foot of the regional performance table.

This is the first time since February 2009 that Northern Ireland has not posted the sharpest rate of decline in private sector output within the UK.

Mr Ramsey added Northern Ireland's muted export-led economic recovery could be partly blamed on its exposure to the Republic of Ireland economy.

"Inflationary pressures continue to build whilst local firms continue to report falling employment levels as they have done continuously since March 2008," he said.

However, the pace of job losses eased in the latest quarter relative to the previous quarter.

"This was due to the services and manufacturing sectors as construction saw the pace of job losses accelerate in December at its sharpest rate since March 2009," Mr Ramsey added.

(BMcC/GK)