Construction work hits six-year low

Mon, 11 Nov, 2019 - 05:10

Geoff Percival

Building and construction activity declined at the fastest pace for more than six years last month, new figures show.

Ulster Bank’s monthly construction purchasing managers’ index (PMI) which is seen as a leading barometer of the sector’s health showed a reading of 46.2 points for October.

This was down from a reading of 48.3 in September and marked the second consecutive month of decline. Any reading below 50 illustrates a sector in decline.

The rate of contraction seen last month was the fastest since June 2013, Ulster Bank said.

The survey showed that new business orders fell last month for the first time in six years.

“Respondents linked this decline to Brexit uncertainty as anecdotes from the survey highlight that concerns about Brexit impacts continue to weigh on activity and sentiment regarding the sector’s prospects for the coming year,” said Ulster Bank chief economist Simon Barry.

“In this context, the recent easing of concerns regarding Brexit crash-out risk may offer some support for construction confidence and activity in the months ahead,” he said.

Commercial building activity decreased for a second straight month, but house building continued to grow.

However, the pace of growth in residential house building activity slowed to a four-and-a-half year low in October. Recent figures from Goodbody showed a strong rise in house completion levels in the third quarter of the year, bringing the year’s total to 15,400 houses.

“However, with unsold stock rising due to lagging private new home sales, the risks remain tilted to the downside to our completions forecast of 24,000 for 2020,” said Goodbody chief economist Dermot O’Leary last month.

Goodbody expects that around 21,000 houses should be completed this year.

“Housing activity continues to grow, with its PMI reading of 51.3 still above the expansion threshold of 50.

“Housing remained the strongest sub-sector for a tenth month in a row, though the pace of residential activity growth has also softened materially in recent months,” said Mr Barry.