The rate of decline in the building industry sped up last month, according to the Ulster Bank Purchasing Managers Index, but the components measured are still off their lowest points.
The index, which is designed to measure the overall performance of the construction sector, dropped to 31.1 in May from 32.9 in April. It shows that while activity continued to contract last month, the worst point appears to have passed. Any figure above 50 indicates growth, while under 50 signals decline.
Ulster Bank points out that the rate of decline slowed notably in April, so some 'payback' was not that surprising in May.
'Despite the deterioration last month, all three components remain off their low points and we maintain our view that the worst has passed, even though activity continues to contract,' commented Ulster Bank economist Lynsey Clemenger.
Activity in the construction sector has now decreased throughout the past two years, reflecting weakness in the wider Irish economy.
Each of the three board sectors monitored by the survey - housing, commercial and civil engineering - saw their rates of activity contraction accelerate in May. The steepest reduction was again in the residential housing sector, while the number of commercial and civil engineering projects also fell substantially.
Employment levels in the construction industry extended the current period of decline to 25 months. However, the pace of reduction moderated to its weakest level so far this year.
Today's survey also reveals that input costs fell at the second fastest pace in its history last month due to increased competition among suppliers.
Despite rising to its highest level since May 2008, sentiment in the construction sector remains negative. Ulster Bank says that new orders are expected to remain weak as the wider economic downturn continues, leading to further reductions in activity over the next 12 months.
