Job losses in construction industry at fastest level for seven months

DECEMBER saw the fastest level of job cuts in the construction sector for seven months, after the harsh winter weather led to a further severe contraction in business activity levels.

The latest Ulster Bank Construction PMI (purchasing managers’ index) fell for the fourth consecutive month, down from 41.7 points to 40.6. The fall in activity was the strongest monthly dip since last May.

“The final reading of 2010 indicates that it was a weak end to another extremely tough year for the Irish construction sector,” noted Ulster Bank’s chief economist, Simon Barry.

“The recent cold snap undoubtedly added to the sector’s difficulties in December, so the survey results may somewhat exaggerate the degree of weakness last month. However, aside from weather effects, it’s clear that the sector continues to face ongoing declines across the three main sub-sectors [housing, commercial and civil engineering activity].”

Last month saw a further decline in new business orders. The increase in job shedding in the sector saw five times as many companies letting people go as those taking people on.

The weather disruption limited the ability of suppliers to deliver on time to construction firms, which meant lead times lengthened for the first time in more than three and a half years.

Meanwhile, the combination of falling new orders and freezing weather was the main reason for a steep drop in purchasing activity.

Apart from the harsh winter weather, basic long-term sentiment amongst building firms improved slightly in December, with many firms saying they expect economic conditions to stabilise over the next 12 months.

“Looking to the year ahead, survey panellists have concerns about the implications of government budgetary spending cuts. However, an expectation that the economy will stabilise in the coming year resulted in a slight improvement in overall confidence about future business activity.”