Commercial construction 'in the eye of storm' as activity falls
THE steep decline in construction activity continued in October according to the latest Ulster Bank PMI survey.
At a reading of 31.2, construction suffered its second steepest decline in activity since data was first collected, in June 2000.
The PMI survey is based around a neutral figure of 50, with anything below that representing a contraction in business activity.
Ulster Bank economist Pat McArdle said the result was no surprise.
"This month, the downturn was mainly in the commercial construction sector, where the index sank to the lowest reading in the history of this series -- and also dropped below the comparable housing index for the first time since July 2006," he explained.
"Commercial activity is now in the eye of the storm. In fact, the housing index bounced a bit but, essentially, still continues to trend sideways, indicating very low levels of activity," he said.
Costs
"Also of note this month was the dramatic fall in input prices. This index is now well into negative territory -- the first time that this has happened since the survey began in June 2000.
"This reflects falling fuel costs but prices of other inputs are now beginning to fall," he said.
The contraction in activity was most marked in the commercial sector, where over half of all panellists noted a decline over the month.
For the first time since July 2006, housing activity did not register the steepest decline of the three monitored areas, despite posting a further sharp fall.
Civil engineering activity contracted for the 11th month in a row, although the pace of reduction weakened.
October also saw a considerable decline in new business at construction companies, job cuts at the third fastest pace in the history of the survey, and further pessimism -- with half of firms expecting activity to be lower in 12 months' time -- the most negative outlook since July.
- Pat Boyle
