Construction continues to struggle

A PICK-UP in international economic conditions is having no effect on the Irish construction sector which is still in dire straits, battling against a raft of job losses and falling orders.

Latest figures from the Ulster Bank construction purchasing managers index (PMI), which measures the health of the industry, found that business conditions continued to deteriorate last month.

The index fell to 33.1 in December from 34.2 in November, well below the 50 mark which indicates growth. Activity, new business and employment fell at faster rates during the month, and for the second consecutive month firms forecast that activity would be lower in 12 months time than current levels.

Chief economist at Ulster Bank, Simon Barry, said: “The December reading of the Ulster Bank Construction PMI reveals a very weak end to what was an exceptionally challenging year for the Irish construction sector. While a pick up in international economic conditions is beginning to benefit the Irish manufacturing and service sectors, the same is clearly not true for the domestically-focused construction industry.

“The detailed results of the survey showed broad-based weakness across commercial, civil engineering and housing, with a 2.5 point reduction in the index of home-building activity, making it an underperformer last month. There were also further reductions in incoming new business in response to which firms are continuing to lay off workers, with the employment index falling to its lowest level in seven months.”

The figures represented the 31st consecutive monthly reduction in activity and the steepest decline since May.

Rates of decline accelerated across all three of the monitored construction categories in December. The steepest reduction was in the commercial sector, where the contraction was the fastest in seven months.

The weakest fall during the month was with activity on civil engineering projects, although the decrease in the category was still substantial.

Increased competition for work meant new business also declined at a faster pace, with the rate of contraction the sharpest since April. Panellists also reported a reluctance amongst clients to commit to new projects.

Employment continued to drop in December, largely reflecting falling workloads.

Job cuts have been recorded in each month since May 2007, with the latest reduction in staffing levels the fastest in seven months.

For the second successive month in December, firms reported negative sentiment regarding future activity levels.