Construction activity slumps to 23% as freefall continues

FIGURES show construction activity continues to freefall, with a slump of 23% recorded for the past 12 months.

The Central Statistics Office (CSO) data show the volume of activity in the construction sector fell by 11.4% in the first quarter of this year, compared with the previous three months, the biggest quarterly fall in a year.

The biggest decline in activity was in the civil engineering sector, which fell by 31.5%, followed by the residential building sector, which fell by 7.4% and non-residential building, which was down 7.2%. The change in the value of production for all building and construction was down 12.9%.

The 23% fall over the past year is in stark contrast to the rest of the eurozone, which experienced an average fall of 2.2%.

CSO figures released on Thursday on the economy also highlighted a big drop in construction output in the first quarter of the year.

The Construction Federation Industry (CIF) said the figures show the continuing fragility of the domestic economy and warned that further cuts to the Government’s construction and infrastructure investment programme will deepen the slump.

CIF director general Tom Parlon rejected the notion that cutting capital investment further is either necessary or prudent given the challenges facing the economy.

“Favouring day-to-day spending over capital investment in the context of tightening spending, whilst perhaps easier from a political perspective, is having the effect of slowing economic recovery, capping future economic growth potential, and leaving an increased legacy of infrastructure deficit and poor-condition assets for future generations,” he said.

The CIF also pointed to the recent publication of a European construction study, which shows that since the onset of recession, Ireland has substantially reduced capital investment, in stark contrast to the approach adopted in other EU countries.

These countries have instead opted to maintain, bring forward and increase spending on public buildings and infrastructure as part of stimulus packages.

The CIF urged the Government to implement new legislation needed to bring about realistic wage levels in regulated sectors of the economy like construction and the proposed construction contracts legislation that is designed to ensure payment to contractors and sub-contractors within the construction supply chain.