Figures released by the Central Statistics Agency (CSO) yesterday revealed a considerable economic slowdown during the final quarter of last year.

The domestic economy - excluding trade - shrank in the last three months of 2007 as a direct result of the drop in house building.

The CSO figures showed that new house completions were down by more than a fifth in October-December from 96,000 last year to 78,000 in 2007.

The Irish Independent has cited unofficial government sources as saying that house completion this year could be below 40,000, rather than the 50,000 estimated in December, cutting growth forecasts and government revenues below the Budget forecasts.

-- Advertisement --

Dermot O'Leary, Chief Economist at Goodbody Stockbrokers said: "House building alone knocked more than 2pc from economic growth in the final quarter of 2007.

"Figures for the first two months of this year suggest a 22% decline in house completions over last year, which will be reflected in economic growth."

Further proof of the tightening margins in the construction industry came as a CSO analysis of wholesale price changes in the sector revealed all material prices increased by 4.2% in the year since February 2007. The most notable yearly changes were increases in Bituminous emulsions (+24.9%), and Stone, sand and gravel (+13.1%). All material prices in this sector increased by 1.0% in February 2008.

In addition, the price of Energy products increased by 2.0% in the year since February 2007, while Petroleum fuels increased by 25.4%. In February 2008, there was a monthly decrease in Energy products of 0.9%, while Petroleum fuels decreased by 3.1%.

(VB)