Construction activity still falling

Construction activity is continuing to slide, having experienced its sharpest decline since October.

The latest Ulster Bank Construction PMI showed total construction activity dropped to 45.8 in February, from an index score of 46.4 the previous month.

The latest decline was marked, and undermines the optimism suggested by the broad stabilisation recorded in Dec 2011.

Simon Barry, Ulster Bank chief economist said: “Having showed tentative signs of stabilising at the end of last year, housing activity is once again falling sharply as is activity in civil engineering, which remains the weakest of the three sub-sectors, in keeping with the pattern of the past two years.

“The index of commercial activity also fell in February, dipping back below the expansion-contraction threshold of 50 having recorded a slight increase in activity in January.

“However, its decline was relatively modest, with the index hovering just below the 50 level at 49.1 last month, leaving the commercial sector as the area showing greatest resilience.”

New orders decreased for the second consecutive month, and at a solid pace that was the fastest since June 2011. Employment decreased again.

However, the rate of job cuts was much weaker than that seen in the previous month, and the slowest in more than four and a half years.

“Constructors continue to express optimism that they may see some increase in activity levels as they look a year ahead,” said Mr Barry.

“However, a second consecutive sub-50 reading on the New Orders index means there is not much prospect of the overall sector returning to sustained expansion in the next few months.

“With available work still very thin on the ground, construction firms remain in job-shedding mode though the pace of decline in employment levels did ease to its slowest pace in over four-and-a-half years.”