Decline in construction worsens

The downturn affecting Ireland’s once thriving construction sector is showing real signs of worsening, with one of its main performance gauges noting activity declined at the fastest pace for nine months in June.

The latest monthly Ulster Bank Construction Purchasing Managers’ Index shows a reading of 42.5 points for June.

While anything below the neutral 50-point mark illustrates a sector in decline, the reading for last month was also comfortably down on the 46.3-point measure for May.

The latest monthly fall ranks as the steepest rate of decline since last September. May’s PMI had already dragged construction industry decline, here, out to a full five years.

All in all, the latest data points to a sector in deepening decline — with general activity and employment levels both continuing to fall — the latter now in free fall for the past five years.

“While construction firms continue to express optimism that activity levels will be higher over the coming 12 months, the new orders index — which is regarded as an important lead indicator — posted its fasted pace of decline since February,” Ulster Bank economist John Fahey said.

“This represents the sixth consecutive below-50 reading on the new orders index and suggests that the outlook remains challenging for the construction sector over the coming months.”

“From a sectoral perspective, the weakness was broad-based; with all three of the principal sub-sectors registering further contraction in activity levels,” Mr Fahey said.

“For the third straight month, housing activity suffered the sharpest contraction in activity compared to both commercial and civil engineering activity; although all three sectors recorded an acceleration in the pace of contraction.

“Given the continued contraction in overall activity levels, the construction sector remains in job- shedding mode. The contraction in employment quickened slightly in June, with employment continuing to decline, as it has done in each month since May 2007.”

The housing activity index fell from 41.8 points to 39.1, last month. Commercial activity went from 46.8 points to 42.9.

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