ACTIVITY IN the construction sector continued to contract in the first quarter of this year, though at a slower pace than in previous quarters, as the number of new orders showed some signs of stabilisation.

The latest Ulster Bank Construction Purchasing Managers’ Index (PMI), which monitors activity in the construction sector, showed that the seasonally adjusted index rose on a monthly basis in March, from 45.8 in February to 46.7 in March. Readings below 50 signal a decrease in activity on the previous month.

According to the index, Irish construction firms have experienced declines in activity levels every month since June 2007.

Activity on civil engineering projects continued to fall substantially, the survey found, while housing activity decreased at a broadly similar pace to that experienced in February.

While construction activity in the commercial sector showed the slowest reduction in activity, the rate of contraction quickened in March.

“Commercial activity is holding up in a relative sense, but indications of stabilisation in this area around the turn of the year have given way to renewed weakness as the index of activity fell to its lowest level since October 2011,” said Ulster Bank’s Simon Barry.

He also noted that the new orders index rose in March, and has returned very close to the break even mark of 50, suggesting a “less negative pattern”.

Some firms surveyed for the study indicated that small contracts had been secured during the month, although others noted a reluctance among clients to commit to projects. Staffing levels continued to decrease in the construction sector last month, the research found.

However, business sentiment was at its highest since January 2007 – representing the strongest expression of optimism since the current downturn began – with 46 per cent of respondents predicting an increase in activity over the next 12 months.