Construction decline accelerates

Activity in the construction sector declined at its sharpest rate so far this year during March, according to new data.

The development means that the building industry has now been in decline for 70 consecutive months, or nearly six straight years.

The latest edition of the monthly Ulster Bank Construction Purchasing Managers’ Index — which tracks the health of the sector — posted a reading of 43.1 points for March. Still well below the neutral 50 point mark, which separates a sector in growth mode from one in decline, the March reading was significantly down on February’s 45.3 point reading.

According to Simon Barry, chief economist at Ulster Bank in the Republic, faster activity declines were noted in all three construction sub-sectors of housing, commercial builds and civil engineering activity.

“Previously encouraging signs on the trend in the new orders index gave way to renewed weakness last month, as survey respondents cited a lack of available projects and strong competition for tenders as key headwinds,” he added.

“In turn, diminished new business opportunities continue to exert downward pressure on staffing levels,” Mr Barry said.

Indeed, the speed of decline in the PMI’s employment index picked up following three consecutive months where the pace of decline showed signs of easing.

“Construction firms responded to lower workloads by reducing employment for the 71st successive month. Moreover, the rate of job cuts quickened to the sharpest in 2013 so far.

“Constructors also lowered their purchasing activity at a faster pace in March. The rate of decline was considerable, and the steepest since Mar 2011,” the report states.

The new survey shows a fall from 46.7 points to 45 points in the reading for housing activity, a drop from 44.3 points to 43.7 points for commercial build activity and a drop from 34.2 points to 31.7 points in civil engineering activity.

The overall drop in construction activity last month was marked by a decline in new orders, which fell at the sharpest pace for three months.

This newest edition of the PMI also shows that sentiment among respondent companies fell to its lowest level since the turn of the year, although firms are still predicting activity increases over the coming 12 months.