(Alliance News) - The reduction in construction activity in Ireland decelerated in January, as employment increased and cost inflation eased to a three-month low, purchasing manager's index survey results from S&P Global showed on Monday.

The headline seasonally adjusted BNP Paribas Real Estate Ireland construction total activity index edged up to 45.9 points in January from 45.1 in December, S&P Global said.

The housing activity index rose to 48.2 points in January from 45.0 in December, while the commercial activity index improved to 44.7 points from 42.8.

Getting closer to the 50-point mark that separates contraction from growth, the results indicate improved conditions.

Input costs rose "sharply" in January, S&P Global said, albeit the rate of inflation eased to a three-month low.

"The slowdown in the overall pace of decline was in large part reflective of a much weaker reduction in housing activity in January. Activity on residential projects decreased slightly, and to the least extent since last September. Commercial activity also fell at a softer pace," S&P Global said.

The employment index climbed to 53.5 points in January from 52.3 in December, indicating increased growth. S&P Global said: "Employment increased for the second month in a row, and at a solid pace that was the fastest in almost a year."

It added: "Improvements in new business are expected in the months ahead, supporting optimism in the 12-month outlook for construction activity. Sentiment eased, however, and was weaker than the series average. Expected improvements in workloads encouraged construction firms to take on additional staff in January."

John McCartney, head of research at BNP Paribas Real Estate Ireland, commented:

"With the temporary waiver of development contributions due to expire in April, it will be interesting to see whether the strong momentum in residential commencements during 2023 will continue over the coming months, leading to resumed expansion in the housing PMI."

The PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 150 construction companies in Ireland. Responses were collected between January 11 and 30.

By Tom Budszus, Alliance News slot editor

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