Construction sector still in decline but at a slower pace
THE construction industry is continuing to decline, but at a slower pace than in the past, according to the latest index from Ulster Bank.
The pace of decline was the slowest in almost three years during June, said the bank, which compiles the monthly Construction Purchasing Managers' Index.
"June data pointed to a marked slowdown in the pace of deterioration of operating conditions in the Irish construction data. This was indicated by a marked easing in the pace of decline in activity, while new orders, employment and purchasing activity all fell at slower rates,'' said the bank yesterday.
The seasonally adjusted index tracks changes in the amount of construction activity. "Although the reading still signalled a marked contraction in activity, it was the slowest since July 2007. Respondents indicated that lower activity mainly reflected reduced new business,'' the bank added.
Commenting on the survey, Simon Barry, chief economist at Ulster Bank, said the building sector had been shrinking for 37 months now.
"However, on a less negative note, the index did jump by almost five points last month -- the largest increase in a year -- indicating that the pace of decline is clearly easing back.''
The record low was hit in January 2009 and while the industry is still in the doldrums, optimism among key players is rising, with housing and commercial benefiting from this.
"The rise in the June reading was reflective of corresponding increases in the sub-indices for housing and commercial. While activity continues to decline in both areas, the latest trends are moving in the right direction, with the pace of decline at multi-year lows in each case," Mr Barry pointed out.
The civil engineering area was less buoyant and the bank said this may reflect a sharp reduction in capital spending by the Government.
Employment
Recruitment remains severely under pressure.
"As workloads declined again in June, construction firms lowered their staffing levels accordingly. Employment has now fallen in each of the past 38 months. The latest reduction was substantial, despite being the slowest since February 2008,'' said Mr Barry.
But inflation in the sector is broadly under control.
"Despite rising for the second month running in June, input cost inflation remained only slight, and much weaker than the long-run series average. The relative weakness of the euro had exacerbated rising raw material costs during the month,'' Mr Barry added.
- Emmet Oliver
Irish Independent
