Accelerated fall in building activity sparks cut in staff and orders
Published 13/06/2011 | 05:00
THERE was little sign of recovery in the Irish construction sector in May, according to the latest Purchasing Managers' Index compiled by Ulster Bank.
It recorded that the decline in activity and new business accelerated last month and that companies responded by reducing staff numbers and purchasing.
This is the third consecutive month the index has recorded an accelerated rate of decline, with the downturn in May more pronounced than in the preceding two months.
Commenting on the findings, Ulster Bank economist Lynsey Clemenger said the renewed sign of weakness last month was mainly driven by a faster fall in the housing sector, where activity fell most sharply since February 2010.
"Commercial sector activity also fell at a sharper rate in May and while the rate of decline in civil engineering moderated a little, housing remained the weakest of the three construction sub-sectors," she said.
The seasonally adjusted index designed to track changes in total construction activity dropped to 41.1 in May from 43.7 in April.
With new orders falling for the ninth consecutive month, the lack of incoming business remains high on the list of factors keeping activity in the construction sector depressed.
"It is not surprising that even modest gains in construction employment continue to look some way off, albeit that the decline in staffing levels in May was the slowest since January,' Ms Clemenger said.
"Meanwhile, expectations of improved conditions in the economy generally continued to leave respondents to the survey optimistic that construction sector activity will be higher than the current extremely low levels in a year's time."
As the workload declined, construction firms lowered purchasing activity accordingly. Input buying decreased for the ninth month in succession and the pace of reduction was marked, despite slowing to the weakest since January.
At the same time, input costs for Irish construction companies increased sharply again last month, extending the current period of inflation to 13 months.
Companies that participated in the survey referred to steel and oil-related products as costing more over the month.