Construction sector optimism rise

Optimism is emerging in the construction sector, with almost half the country’s builders expecting business to grow over the next 12 months.

The latest Ulster Bank Construction PMI indicates that while the construction sector continued to contract at the end of the first quarter of 2012, strong optimism was also recorded among the building sector

“Business sentiment was at its highest since January 2007 in March and, as such, was the strongest since the current downturn in activity began [in June 2007],” the report says.

“Exactly 46% of respondents predict activity will increase over the next 12 months, with signs of improving economic conditions and a forecast rise in new orders supporting optimism.”

Ulster Bank chief economist for Republic of Ireland Simon Barry said the March results of the survey shows that construction firms continue to experience outright declines in activity levels, as they have done in each month since June 2007.

“However, some of the forward-looking elements of the survey tentatively offer a bit more encouragement about prospects for the sector.

The new orders index rose in March, and has returned very close to the breakeven mark of 50 — a level at which it has been bobbing around for most of the past six months, hinting that the multi-year slump may finally be giving way to a less negative pattern.

Moreover, sentiment rose last month to its highest in over five years as more firms reported a belief that activity would be higher in a year time, though the uptick in confidence is probably more a reflection of how far activity has fallen than expectations of a sharp recovery any time soon, he said.

Mr Barry said that each of the main sub-sectors continues to witness ongoing contraction, with civil engineering again recording the sharpest falls while housing also showed large-scale declines.

“Commercial activity is holding up in a relative sense, but indications of stabilisation in this area around the turn of the year have given way to renewed weakness as the index of activity fell to its lowest level since October 2011,” he added.

Despite the growing optimism in the sector, there were further reductions in employment.