Construction industry shrinks for 35th month in a row
Tuesday May 11 2010
THE building industry shrank for the 35th consecutive month in April, the regular survey from Ulster Bank shows.
With activity falling so rapidly, it is likely that this month will mark three years of continuous contraction in the industry.
The April data showed new business and employment fell at faster rates than in March, while overall activity continued to contract substantially.
Simon Barry, chief economist for the Republic of Ireland at Ulster Bank, said the pace of decline in construction had eased in each of the past four months but the rate was still significant.
"At 42.5, the index which measures activity in our purchasing managers' survey remains clearly at the break-even level of 50," he said.
"The construction sector is a clear laggard in terms of the recovery stakes, as both the services and manufacturing surveys have indicated a return to growth in the past couple of months."
Each of the three broad construction categories posted lower activity during April. The steepest contraction was in the commercial sector, where activity decreased substantially and at the fastest pace in three months.
Both the residential and civil engineering sectors recorded slower falls than in the preceding month, but each still contracted sharply.
Managers said the reduction in activity largely reflected a fall in new business. The rate of decline in new orders accelerated since the previous month, and was marked. They said demand among clients continued to fall and competition for new business was intense.
Jobs were lost more quickly than in April, meaning employment in the industry -- which was more than a quarter-of-a-million at its peak -- has fallen each month for three years.
Despite all this, sentiment improved, with the expectations index of future business at its highest level in three years last month.
"Construction isn't benefiting from the global recovery to the same extent as other areas of the economy, but there is some encouragement to be taken from the less negative trajectory which has emerged so far this year," Mr Barry said.
"The finding that construction firms are becoming more optimistic about the future reflects an improvement in sentiment regarding prospects for the overall economy," he added.
- Brendan Keenan
Irish Independent
