Building sector inactivity led to a fifth being wiped off volumes during the first three months of this year.

There was a 21.6% dip in indexed production for the building and construction sector.

This represented an 18.2% fall in value, according to figures from the Central Statistics Office (CSO).

Commentators have suggested these figures are the result of a 38% slump in residential house building.

There was, however, a slight increase in non-residential construction, albeit a 9% rise.

During the three-month period there was also a 4% fall in civil engineering activity.

In 2007, the building industry contributed €37 billion to the Irish economy.

This represented almost one quarter of the wealth generated in the country.

A projected 17.7% fall in construction for 2008 would reduce the sectors output by €6.5bn, year on year.

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Industry experts have warned house builders are feeling the largest impact of the current slump.

Varying estimates of housing building totals for this year range from 45,000 to 48,000.

Almost half the number of homes built in Ireland in 2006, when the property boom provided 88,000 new houses.

The CSO has suggested construction employment figures during the first quarter of 2008 sat at 274,400 compared to 282,000 in early 2006.

However, during the second quarter of this year record unemployment rises have been reported.

The Construction Industry Federation's Tom Parlon has predicted these figures will grow.

Mr Parlon said the current credit crunch would generate around 20,000 to 30,000 jobs losses in the sector by the end of this year.

Commentators have put much emphasis on the importance of the Government's National Development Plan.

These infrastructural projects would provide much need work for the construction sector.

The investment figure for this year stands at €13bn, however many have suggested this amount could be slashed by the exchequer, to fall in line with the difficult economic circumstances being felt across the country.

Talks have been held between the government, banks and the CIF.

The Federation has called on the authorities to provide incentives to kick-start the sliding housing market.

The official builders' body has also warned of the danger that house building could fail to meet the underlying demand for new homes.

This figure is expected to be around 50,000.

The Federation said such a hold back could create a bottleneck in the sector, once trade is reinvigorated.

(PR/JM)