Builders’ tender prices drop 17%

BUILDERS cut staffing levels again in February as figures show construction tender prices fell by 17.2% over the last 12 months.

This is the 34th month in a row that workers in the sector were laid off according to the latest Ulster Bank Construction Purchasing Managers’ Index.

The Society of Chartered Surveyors (SCS) will this morning release data that shows construction tender prices fell by 17.2% over the last 12 months.

The figures also show that by the end of the year tender prices had fallen 29% from their 2007 peak.

Chairman of the quantity surveyors division of the SCS Micheal O’Connor said: “The index records tender prices every six months and this is the fifth straight decline in a row. While there was a need for a correction, the continuous fall in tender prices and the extent of those falls year-on-year is forcing firms to take on jobs at below cost.

“This situation is not sustainable for any period and we are seeing that with the amount of firms going out of business and the catastrophic rise in unemployment throughout this sector.”

The SCS wants the Government to take advantage of price levels not seen since 1999 and invest in public infrastructural projects.

“These figures show it is an excellent time to embark on a building project. Unfortunately, there is very little private sector investment at the moment and the Government has chosen to cut back on the public capital programme.

“Unless swift, imaginative action is taken now the sector will continue to haemorrhage jobs and we will lose the skills and expertise we have built up over the last 15 years,” Mr O’Connor said.

Ulster Bank economist Lynsey Clemenger said the latest reading of the Ulster Bank Construction PMI shows that a lack of new business is continuing to weigh on the domestically-focused construction sector.

“Activity remained well into contractionary territory in February, albeit that the pace of decline was the slowest since November 2007,” she said. “This stands in contrast to the signs from the corresponding manufacturing and services sector surveys which have been more encouraging lately, with improved global conditions and an associated rise in export orders bringing these two sectors close to expansion.”

Ms Clemenger said developments across each of the housing, commercial and civil engineering sectors mirrored the change in the headline construction PMI index, with all three sectors showing a tendency to contract at a less severe pace in February, for the second month running.

“Looking ahead, firms continue to think that activity will improve in a year’s time, albeit that optimism levels did slip back a little following the surge in confidence in January,” she said.