Building and construction growth slows to 6-year low

Building and construction growth slows to 6-year low
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Construction activity grew at its weakest pace in nearly six years last month, the latest survey of the sector shows.

The July edition of Ulster Bank's construction purchasing managers' index - which is viewed as being a key barometer of the sector's health - gives a reading of just 51.4 points. That is down from 53.1 in June and leaves the sector only slightly above the neutral 50 point mark, which divides a growing sector from one in decline.

Commercial activity grew, but while housing activity still measured a reading of nearly 56 points, it saw a near three-point drop from the preceding month. July also saw the weakest level of hiring in more than four years and new business growth was the slowest since early 2015.

While building firms remain confident of increased work over the coming 12 months, Brexit anxiety has taken a hit with optimism levels again at a four year low.

"Optimism levels have continued to slip back from previous highs with the future activity index declining to its lowest level in over six years amid some reports that Brexit is having a negative impact on the outlook," said Ulster Bank chief economist Simon Barry.

"After a three-year period of particularly and exceptionally rapid expansion, a variety of official indicators have clearly signalled that the pace of growth in construction has cooled in the first half of this year. The July PMI results provide early, if still somewhat tentative, evidence of a further moderation in the sector's performance early in the second half," he said.

Already mired in decline, civil engineering activity fell further in July, hitting a fresh low reading of 40.5 points.

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