Construction activity remained strong in February but the rate of growth in the sector eased gradually, according to the latest Construction Purchasing Managers' Index (PMI) from Ulster Bank.
While the sector's rating on a monthly composite index decreased marginally to 59.2 in February from 60.2 in January, the bank said such a rating was well above the benchmark rating of 50 which indicates a positive performance in the month. Any rating above 50 suggests that activity increased and a rating below 50 suggests activity fell.
"Construction activity remained strong in February with the PMI overall index broadly in line with the average of the past two years," said the bank's chief economist Pat McArdle.
"After peaking in December, Housing activity eased back in each of the past two months, just as it did in early 2005. Indeed, the housing index is little changed from a year ago, prima facie indicating broadly similar rates of expansion," he said.
"Otherwise, there was little change with confidence high, cost inflation remaining strong - interestingly, steel was one of the few items to fall in price - and employment continuing to expand at a steady rate, much as it did for most of last year."
The more moderate pace of expansion was evenly balanced across residential, commercial and civil engineering activity, he said. The index for housing stood at 57.1 in February, still positive but showing the largest fall of the three subsectors, from a reading of 59.2 in January.
"The Department of Environment house completion figures, in contrast, jumped sharply in the latter part of 2005 and, while they fell back in January, they are still running at levels well in excess of a year ago. Further declines in the Department of Environment monthly numbers will be needed to bring the PMI and the Department's figures back into agreement," Mr McArdle said.
The bank's findings confirm the picture of positive but moderating activity in the industry. Last month the Central Statistics Office construction employment index showed jobs growth slowing at the start of the year, but remaining positive. "The rate of workforce expansion remained robust, despite easing for the second month in a row," Mr McArdle said.
However, the findings also point to congestion in the industry. An increase in purchasing activity means that firms have to wait longer for the delivery of purchases as lead-times worsened for the ninth successive row. "Irish constructors faced a sharpened rate of input cost inflation in February. Average input prices rose at the strongest pace for four months as firms indicated that the costs of fuel and a range of raw materials had increased," the bank said.
Firms remain optimistic about future activity levels, Mr McArdle said. "New work expanded at the most marked pace for 14 months as a number of firms reported the positive impact of recent marketing activity."
The index is calculated on a monthly basis and adjusted to account for seasonal factors.
