A further decline in activity was recorded by Irish construction firms in June, according to The Ulster Bank Construction Purchasing Managers' Index (PMI) report.

New business also decreased, albeit marginally. Lower new work led to further sharp reductions in purchasing activity and employment, but business sentiment improved. On the cost front, input price inflation slowed again and was only slight.

The Ulster Bank PMI® – a seasonally adjusted index designed to track changes in total construction activity – posted 43.4 in June, up from 42.0 in May but still signalled a sharp monthly fall in activity. Some respondents indicated that projects had reached completion, with new order levels insufficient to compensate.

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Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, said: "The Irish construction sector continued to contract in June according to the latest reading of the Ulster Bank Construction PMI. The pace of decline did ease slightly last month, as the PMI rose slightly to its highest level since February reflecting a slower rate of contraction in both Housing and Commercial activity.

"While survey respondents continue to experience very challenging conditions at present, some forward-looking elements of the survey offered some encouragement about future prospects. Notably, the New Orders index rose to its highest level since March 2012. The reading of 49.5 in June came very close to the 50 breakeven level, thus tentatively hinting at a possible stabilisation in new business flows. And some optimism surrounding potentially better order levels boosted confidence among respondents, with sentiment regarding the 12-month outlook rising to its highest level since early 2007."

(CD/JP)