Ireland’s building industry contracted in March at the slowest pace in almost two and a half years, adding to signs that the country may be emerging from its deepest recession.

A construction index rose to 42.3 last month from 40.4 in February, Ulster Bank said in a monthly report published today. A reading below 50 indicates contraction. The decline is the slowest since October 2007.

Ireland’s economy should return to growth in the second half of this year, the government has said.