Construction activity still on the wane

Business conditions at Irish construction firms worsened again in February, according to new date released today, although there were signs that the rate of deterioration eased since the previous month.

Activity declined sharply, but the pace of contraction was the weakest in 27 months, according to the Ulster Bank Construction Purchasing Managers’ Index.

The index rose to 40.4 in February, from 36.1 in the previous month to signal a further substantial fall of activity in the sector.

Lower new business was the main factor driving the reduction in activity.

However, the rate of decline slowed for the second consecutive month to its weakest since November 2007.

There was no good news on the employment front, with Irish constructors cutting jobs again in February, for the 34th consecutive month.

The data "shows that a lack of new business is continuing to weigh on the domestically-focused construction sector," said Ulster Bank economist Lynsey Clemenger.

"While new orders in construction firms continued to decline in February, the rate of contraction does look to be moderating. Nevertheless, with new business still falling, employment in construction firms continued to be scaled back, albeit at a slightly slower pace than in January.”