Monday 16 October 2017

Construction sector shrinks further but sentiment strengthens

Colm Kelpie

Colm Kelpie

THE Irish construction sector continued to shrink last month, with the rate of decline little changed since the start of the year.

New orders and employment each fell at a slower pace, but business sentiment improved, according to the Ulster Bank Purchasing Managers' Index.

The overall index came in at 45.3 in February, slightly lower than the reading of 45.8 recorded in January.

Anything below 50 signals that the sector is shrinking.

Ulster Bank economist John Fahy said the survey findings showed that the business environment remained challenging for Irish construction firms.

"The construction sector has been severely hampered by the lack of new business opportunities," Mr Fahy said. "The new orders index, which is a key lead indicator, continued to contract in February.

"However, the rate of contraction in new orders slowed for the third month running and is now at its best level since March 2012, offering some slight encouragement that the dampening impact from the lack of new business is easing."

The weakest fall in activity was seen on housing projects, with the sector also the only one to post a slower decline than at the start of the year.

The commercial and civil engineering sectors each saw a slightly faster reduction in activity, with the sharper overall fall in civil engineering projects.

Slowed

New orders at Irish construction firms decreased for the 14th successive month in February. However, the rate of contraction slowed for the third month running to its weakest since March 2012.

The pace of reduction in employment also slowed during the month and was at its weakest in 68 months.

However, in a more upbeat tone, business sentiment strengthened for the fourth successive month and was at its highest since March of last year.

"Anecdotal evidence suggested that the principal cause for optimism among panellists was an expected improvement in wider economic conditions over the next 12 months," the survey stated.

Irish Independent

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