Construction’s decline accelerates

THE construction sector’s decline accelerated in October, with civil engineering leading the plunge, according to the Ulster Bank Construction Purchasing Managers’ Index.

Job losses in the building sector continued as confidence fell again.

Commenting on the survey, Lynsey Clemenger, economist at Ulster Bank, said the latest reading of the index showed that the rate of contraction in the sector had accelerated for the second month running in October. “While the headline index remains off the record lows seen at the start of last year, at 42.3 it is at the lowest level since May,” she said.

“The further signs of renewed weakness in October were concentrated in the civil engineering and commercial sub-sectors.

“While activity in the housing sector continued to fall, the rate of contraction eased back, albeit in the context of what are extremely low levels of activity,” she added.

Ms Clemenger said that what is clear from the report is that the industry continues to face major challenges, given the lack of incoming business.

“New orders fell back for the second consecutive month in October, with survey respondents noting uncertainty about the wider economic environment as a key factor in explaining why clients are holding back on spending,” she said.

“For constructors themselves, the upcoming cuts in Government spending are a concern in terms of what this will mean for activity in the industry in the coming year,” she added.

“It is against this backdrop that confidence in the construction sector is now at its lowest level so far this year.”

The report’s authors noted that of the three monitored sectors, the sharpest fall was seen in civil engineering.

“Activity on commercial projects also decreased substantially. However, the rate of decline in residential activity eased to the weakest in the current four-year sequence of reduction,” they added.

New orders in the sector have declined in 41 of the past 43 months

“Staffing levels at Irish constructors fell again in October. The rate of job-shedding remained sharp, despite easing to the weakest in 39 months.

“Falling workloads and attempts to reduce costs were the main factors behind the latest drop in employment,” they said.

Those surveyed for the index said that input costs increased for the sixth successive month, driven by higher raw material prices.

Metals and fuel-related costs were mentioned in particular. However, panellists said the rate of inflation remained modest.