Fall in new orders poses fresh challenge to industry
Published 11/10/2010 | 05:00
The beleaguered construction industry faces yet another challenge with the Construction Purchasing Managers' Index (PMI) reporting a fall in new orders for the first time in three months.
The Ulster Bank Construction PMI, a seasonally adjusted index designed to measure the overall performance of the construction economy, dropped to 44.5 in September from 48.4 the previous month.
A reading below 50 signals a contraction in activity levels, and above 50 an expansion.
The latest data shows that the sector has been in contraction for 40 months now.
The latest reading showed an acceleration in the rate of contraction as the index fell to its lowest level since May. Anecdotal evidence linked the reduction in activity to a fall in new orders.
Commenting on the survey, Simon Barry, chief economist at Ulster Bank, said: "The latest reading of the Ulster Bank PMI showed that the construction sector experienced renewed weakness in September.
"The index remains well off its record lows seen in early 2009 which is an indication that the sector is not contracting as severely as at the extreme point of the cycle."
For the second consecutive month, the decline in activity was led by the civil engineering sector, where the contraction was the fastest since June. Housing activity decreased at a much steeper pace than in the previous month, and at a sharper rate than the series average.
Commercial activity fell markedly in September, extending the current sequence of contraction to 35 months.
"The past two surveys had picked up some very marginal increases in new business for construction firms," Mr Barry added.
"However, new orders fell back again in September, highlighting that a lack of incoming business remains a major issue for the sector, in turn resulting in further reductions in employment levels," he said.