Contraction rate in construction slows

The construction sector remains deep in recession, although there are signs that the pace of contraction is slowing, according to the latest Ulster Bank Construction Purchasing Managers’ Index.

The index fell to 45.3 compared with 45.8 for the previous month. Anything under 50 denotes contraction. According to respondents in the survey, the lower rate of new orders was cited as the main reason behind the fall in the index.

Commenting on the survey, John Fahey, economist, Republic of Ireland, at Ulster Bank, said: “The February reading of the Ulster Bank Construction PMI indicates that the business environment remains challenging for Irish construction firms.

“The latest survey result indicates that the pace of contraction was slightly stronger last month, registering 45.3 in February, versus a reading of 45.8 in January.

“From a sectoral perspective, all three principal sub-sectors — housing, commercial activity, and civil engineering — continued to experience contraction in activity levels.

“ It is not surprising then, that survey respondents remain in job-shedding mode, although the pace of contraction in employment levels did ease for the third consecutive month, and the reading of 48.3 is moving nearer the break-even level of 50.”

The bad news for the Government is that employment levels are at their lowest level for 68 months. The fall-off in new orders was blamed on continued job losses.

The parlous state of the construction industry continues to be a huge drag on unemployment levels.

During the peak of the boom, the sector accounted for roughly 23% of GDP.

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