Construction activity figures suggest sector is close to stabilising
Published 09/01/2012 | 05:00
ACTIVITY at Irish construction firms fell only marginally in December and new orders rose, suggesting some stabilisation of the sector, Ulster Bank said yesterday.
But purchasing activity and employment both continued to decline in the construction sector, the bank's monthly index reported.
On the price front, the rate of cost inflation moderated for the second month in a row.
The Ulster Bank Construction Purchasing Managers' Index -- a seasonally adjusted index designed to track changes in total construction activity -- rose to 49.9 in December from 47.7, meaning there was only a negligible reduction in activity.
"The latest reading was the highest since May 2007. Although a number of firms reported that business conditions remained fragile, others indicated that new order growth had acted to boost activity,'' the bank reported.
Commenting on the survey, Simon Barry, chief economist Ireland at Ulster Bank, said: "There were further signs that the Irish construction sector may be approaching a point of stabilisation. The December survey featured several encouraging developments.
"The results point to a slight increase in housing activity last month -- the first time the survey has pointed to a rise since October 2006 -- while the rate of decline in commercial activity eased for the fifth month in a row to just a fraction below the 50 level.
"As has been the case for most of the past two years, activity in civil engineering continues to underperform quite markedly and, unlike the other two sub-sectors, is continuing to contract at a sharp pace,'' he said.
"Also offering encouragement was a rise in the new orders index to back above 50 for the second time in three months, as some firms reported higher levels of new business.
"Our overall take on these latest results is that they offer some heartening evidence that, after an extraordinarily severe downturn which has lasted over four-and-a-half years, the Irish construction sector looks to be in the early stages of a bottoming out process.''