Building sector output drops 23.3%

HEAVY year-on-year falls in both commercial and residential construction projects dragged the volume of output in the building sector down by 23.3% in the fourth quarter of 2010 compared to the same three-month period in 2009.

The value of construction output fell by just over 22%, according to latest figures from the Central Statistics Office (CSO). Yesterday’s figures also showed that output volume was 1.9% lower in the fourth quarter of 2010 when measured against the preceding quarter; with value of production falling by 2.6% on a quarter-by-quarter basis.

“The fall in the volume of output reflects year-on-year declines of over 31% and almost 21%, respectively, in residential building work and civil engineering work. Output in non-residential building work fell by 19.6%,” according to the CSO.

In the year up to the start of the fourth quarter, output in the building sector fell by 4.3%, year-on-year, across the EU. Ireland’s decline was rated amongst the highest; with only Greece (-33.5%) and Spain (-28.6%) ranking worse. Other large industry declines were evident in Lithuania, Poland and Finland.

One economist said the figures show “little hope” exists for some kind of construction industry recovery over the next couple of years.

“There is little evidence to support any recovery in activity in this sector in 2011, or indeed in 2012, and the lack of activity in the Irish construction sector will continue to act as a significant drag on economic output. It will slow down the overall recovery in the economy, outstripping the gains made in the export and industry sectors in 2011,” commented Joan Henry, head of research at estate agents, Savills Ireland.

“The Government’s fiscal policies and lack of incentives along with poor active demand for new homes... mean that the prospects for new building activity being stimulated remain very poor.”