Further decline for building sector

THE construction industry suffered further in May, with declines in general activity and new business levels picking up pace.

On a whole, the latest edition of the monthly industry monitor from Ulster Bank — the construction purchasing managers’ index — dropped (from 43.7 points in April to 41.1 points) for a third consecutive month.

Significantly, the fall in May was the strongest monthly decline so far this year and pushed the continual downward momentum in activity out to four years.

Ulster Bank economist Lynsey Clemenger said: “The renewed signs of weakness evident last month were predominantly driven by a faster rate of decline in the housing sub-component, with activity here contracting by the most since February 2010.

“Commercial sector activity also fell at a sharper rate in May and, while the rate of decline in civil engineering moderated a little, it remained weakest of the three construction sub-sectors.

“With new orders falling for the ninth consecutive month, in May, the lack of incoming business remains high up on the list of factors keeping activity in the construction sector depressed.

“Indeed, even for the business that constructors manage to secure, the still very elevated input prices — primarily as a result of higher costs of steel and oil-related products — represents an additional headwind.

“Given these factors, it’s not surprising that even modest gains in construction employment continue to look some way off, albeit that the decline in staffing levels in May was the slowest since January,” Ms Clemenger concluded.

The rate of job losses may have slowed in May but it remained substantial. The fall in new orders was the main factor in the latest reduction in employment.

However, respondents to the latest Ulster Bank survey said they remain optimistic of some level of pick-up in activity over the coming 12 months, mainly on the back of the anticipated improvement in conditions in the wider economy.