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Pace of construction collapse picks up

Monday, September 10 10:18:57

Activity in the embattled construction sector last month decreased at its fastest pace since September of last year as new orders dried up, the latest Ulster Bank Construction Purchasing Managers' Index (PMI) showed today.

Firms subsequently lowered their employment and purchasing activity further, while sentiment dropped to the weakest since December 2010.

The index posted 40.7 in August, down from 42.2 in the previous month where a reading above 50 denotes growth.

"The August reading of the Ulster Bank Construction PMI shows that the Irish construction sector continues to experience falling activity levels. The latest survey results indicate an acceleration in the pace of contraction, with the headline index of overall activity falling to 40.7 in August, the fastest pace of decline since September 2011. >From a sectoral perspective, the weakness recorded in August was broad-based, with all three of the principal sub sectors experiencing declining activity levels. The sharpest contraction was registered in civil engineering activity, although activity levels in both housing and commercial activity also declined at a faster pace last month. Given the persistent falls in activity levels, the construction sector continues to shed jobs, albeit at a slightly slower pace in August," said John Fahey, Economist, Republic of Ireland at Ulster Bank.

Constructors again recorded falling activity across all three monitored sectors. The sharpest decline in August was registered on civil engineering projects, where activity decreased at the fastest pace in six months. The slowest reduction was seen for commercial activity, although the fall in the sector was still marked.

The rate of contraction in new orders accelerated for the fifth successive month in August, and was the sharpest since December 2009. Weak demand in both domestic and foreign markets, as well as fragile confidence in the sector, were factors highlighted by panellists that recorded a fall in new orders.

Irish construction firms lowered their staffing levels in line with declining workloads. Employment has fallen in each month since May 2007, and the latest reduction was sharp.