Construction sector still weakening

THE construction sector is continuing to show signs of weakness as firms shed staff and business.

Irish construction activity declined further last month, with uncertainty surrounding the economic climate weighing on the sector.

Alongside the fall in activity, further declines were recorded in new orders, employment and purchasing activity.

The Ulster Bank Construction Purchasing Managers’ Index (PMI), a measure to track the health of the industry rose to 43.5 in August, from 42.1 in the previous month, to signal a weaker pace of contraction that was the slowest in four months. That said, the rate of decline was still sharp overall and activity has fallen in each month since June 2007.

Ulster Bank economist John Fahey said the construction sector continues to face a challenging outlook in the near term, as it is weighed down by the lack of new business. “The latest PMI report showed new orders declining for a 12th successive month in August and the rate of decline in new orders accelerated over the month. Given that activity levels are still extremely low, employment in the construction sector continued to decline, as it has done in each month since May 2007, although the pace of contraction has slowed for a sixth month.”

The construction industry has now been contracting for the past 51 months but it did rise slightly in August, for a second straight month, indicating an easing in the pace of contraction in construction activity.

New orders at construction companies fell last month, as has been the case throughout the year. Respondents to the PMI survey noted falling demand, which partly reflected fragile economic conditions.

The PMI also showed that, as workloads declined, construction firms lowered employment levels further in August.