Construction activity declined for the third month running in March as most building sites remained shuttered due to Covid-19 restrictions.
Activity across all sub-sectors fell sharply, according to Ulster Bank's monthly measure of activity in the sector, but the pace of decline eased somewhat relative to the extreme weakness registered in January and February.
The bank's Purchasing Managers' Index is designed to track changes in total construction activity on a scale of 1 to 100.
It remained well below the 50-breakeven point in March.
However, at 30.9, it was up from February's reading of 27.
The decline in house building activity eased markedly as the quarter came to a close, the report concluded.
There was increasing confidence among firms that the coming year will see an expansion in activity, with an end to the lockdown expected and the subsequent reopening of sites as well as a release of pent-up demand.
Construction of housing is due to pick back up from today from the very low level of activity permitted in recent months.
Sentiment was at its highest in over two years with almost 60% of respondents forecasting an expansion of activity.
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"Despite what has undoubtedly been an exceptionally weak start to the year, survey respondents are becoming increasingly upbeat about the prospects for recovery," Simon Barry, Chief Economist, Republic of Ireland at Ulster Bank, said.
"The jump in confidence was underpinned by the expectation of improved business conditions for the sector as restrictions are eased and as pent-up demand is released.
"Indeed, the recent government announcement that residential and childcare-related construction can restart from this week marks an important, albeit partial, step in the sector's recovery journey," he added.
Input cost inflation quickened in March at the fastest pace in over three years, the report found.
The pandemic and Brexit were the two key factors leading to higher input prices, according to respondents, with rising costs for shipping and raw materials such as metals mentioned in particular.
Both factors were also blamed for continued severe delays in receiving purchased items.
"There's a dichotomy between the impact of the restrictions over the last few months, but definitely a sector that's looking forward to better times," Simon Barry said of today's PMI results.
Speaking on Morning Ireland, he said it couldn't be automatically presumed that housing output would be as low as 16,000 units this year, as some estimates have projected.
"It's worth bearing in mind that there were similar projections last year and they proved to be excessively pessimistic," he said.
"There is a reasonable pipeline of activity there. For example, almost 22,000 new units were commenced in 2020. The sector has demonstrated ability to bounce back quickly once restrictions are eased."
20,676 housing units were completed last year, according to the Central Statistics Office, considerably more than had been forecast at the height of the first lockdown last year.
It was down less than 2% on the number of completions in 2019.