Construction activity remained depressed in March but there are now signs that the overall slowdown is levelling off, according to new figures from the Ulster Bank.

The Construction Purchasing Managers' Index (PMI) - a seasonally adjusted index designed to measure the overall performance of the construction economy - still indicated a substantial deterioration in business conditions in the Irish construction sector.

Chief Economist at Ulster Bank, Pat McArdle said: "Signs last month that there was some levelling off in the rate of decline in construction activity were again evident in March, when all three sub-components posted slightly higher numbers.

"However, the numbers remained below 50, indicating that activity in March was down significantly on last month, in particular in the case of housing and civil. The rate of decline in construction employment accelerated to a survey high," he said.

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Housing remained the worst performing of the three featured construction areas in March. The rate of contraction of housing activity remained rapid, albeit the weakest since September 2007. Civil engineering activity fell sharply, while commercial declined solidly, although both contracted at weaker rates than in the previous month.

New orders continued to fall sharply at Irish constructors in March, with around 40% of firms recording a decline. Panellists suggested that lower new business volumes reflected worsening demand for construction in general. A contraction of new orders has now been signalled in each month of the past year.

Data for March signalled a survey record contraction of staffing levels at Irish construction companies. Employment declined at a substantial pace as firms adjusted to reduced workloads. Employee numbers have now fallen for eleven months in a row.

Prices paid for inputs increased moderately as firms reported higher fuel and raw material costs. However, the rate of cost inflation was well below the average for the past year.

Firms in the Irish construction sector registered a further substantial decline in input buying in March as they utilised existing stocks and responded to falling activity requirements. The rate of contraction of purchasing was only marginally weaker than January's survey record.

Construction firms were modestly optimistic regarding the outlook for activity growth. However, in some cases, the expectation of higher activity was based on the view that it was unlikely to fall much further.

(VB/JM)