THE ULSTER Bank Construction Purchasing Managers’ Index – a key indicator of the health of the construction industry – reached its highest level in 4½ years in December, suggesting a stabilisation of the market, writes Suzanne Lynch.

The index rose to 49.9 in December from 47.7, signalling a negligible reduction in activity during the month. A level of 50 indicates an expansion in activity. The highest level reached since May 2007 is 49.9. New orders also rose for the second time in three months, suggesting an improvement in the sector. However, construction firms continued to cut jobs in December. They also reduced their input buying again. While the rate of input cost inflation slowed in December, input prices still increased for the 20th month in a row.

“These latest results . . . offer some heartening evidence that, after an extraordinarily severe downturn which has lasted over four and a half years, the Irish construction sector looks to be in the early stages of a bottoming-out process,” said Ulster Bank chief economist Simon Barry.