November dismal for construction

NOVEMBER was another dismal month for the construction sector, with activity, employment, and new business all deteriorating.

According to the latest Ulster Bank purchasing managers index (PMI) activity in the Irish construction sector sank further in November, with the pace of contraction accelerating.

New business and employment also fell at faster rates, while business sentiment was negative for the first time since last December.

The PMI, which measures activity in the sector, fell for the third month running to 41.7 in November, from 42.3 in October.

The reading signalled a substantial decline in construction activity that was the fastest since May.

Ulster Bank chief economist, Simon Barry said: “The November reading of the Ulster Bank construction PMI signals a further deterioration in conditions facing Irish construction firms. The headline activity index posted its third consecutive monthly decline, taking it back to its lowest level since May.

“Declining levels of new incoming business remains a critical issue facing the sector, as tentative signs of stabilisation in the summer have given way to renewed weakness in new orders in the past three months.

“The ongoing decline in workloads continues to put considerable downward pressure on staffing levels across the sector, with the November survey showing that the pace of job-shedding accelerated to its fastest pace since May.”

All three sub-sectors continue to contract at a rapid rate, though there was a slight easing in the pace of decline in commercial activity last month.

Housing activity, however, which has been in decline for over four years, shifted lower at a faster pace in November.

The weakest area of construction remains the civil engineering sector where accelerating weakness in November means this sub-sector is experiencing the sharpest falls in activity seen since September 2009.

“The ongoing retrenchment in the Government’s capital programme is weighing heavily on both activity and confidence levels, with sentiment regarding future prospects for the sector plunging to an 18-month low last month,” said Mr Barry.

Also jobs were cut at a steep pace, mainly in response to the fall in workloads last month.

As with activity and new business, the pace of decline in employment accelerated and was the fastest in six months.