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Building activity fell by over 50pc in January

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Significant slowdown: Housing construction was the hardest hit, according to Ulster Bank’s Construction Purchasing Managers’ Index

Significant slowdown: Housing construction was the hardest hit, according to Ulster Bank’s Construction Purchasing Managers’ Index

Significant slowdown: Housing construction was the hardest hit, according to Ulster Bank’s Construction Purchasing Managers’ Index

Construction activity fell by more than half in January due to Covid-19 restrictions.

Housing construction was the hardest hit, according to Ulster Bank’s Construction Purchasing Managers’ Index (PMI), although commercial and civil engineering activity was also way down.

The Ulster Bank PMI, which tracks changes in total construction activity, fell to 21.1 in January from 52.3 in December, following two successive months of growth. A score under 50 represents a drop in activity on the last month.

It was the steepest fall since May last year, Ulster Bank said.

“The restrictive measures that the sector is now working with are having a sizeable impact across the full area of construction,” said Simon Barry, Ulster Bank’s chief economist for Ireland. “But as weak as the survey results for January are, they’re not as weak as the kinds of readings that we experienced in April or May last year.”

The latest lockdown saw most construction suspended on January 8, except for essential health, education, transport and social housing projects, and home repairs.

Since then, housing activity has seen a steep decline, with Ulster Bank’s construction PMI falling to 19.0 in January from 56.2 the previous month.

Activity was also down by at least half in the commercial sector (to 24.2 from 49.7) and civil engineering (to 19.7 from 42.0), compared to December.

New orders saw their sharpest drop in eight months, with 60pc of respondents to Ulster Bank’s survey reporting a reduction in new work in January. Purchasing activity also fell sharply as projects were put on hold and companies ran down stockpiles.

Brexit compounded supply delays, with suppliers’ lead times seeing the largest increase in 20 years of data collection. Jobs in the sector were down for the first time in four months as site closures and a lack of new orders weighed on companies.

“The slump in actual and prospective activity has in turn weighed sharply on staffing levels last month,” said Mr Barry. “This clearly signals that the sector is likely to remain under significant pressure in the near term.”

Last week saw 62,534 construction employees claiming the Pandemic Unemployment Payment, which was the fastest-growing sector for claimants, the Department for Social Protection said.

However, construction firms are relatively upbeat for 2021, with hopes that the vaccine roll-out and the end of restrictions will improve prospects.

“The closure that the construction sector is facing this time round isn’t quite as severe or as extensive as was the case during the first lockdown,” said Mr Barry.

Despite successive lockdowns, the Central Statistics Office said that home completions in 2020 finished just 1.9pc down on 2019, largely down to the growing number of new apartments finished in the fourth quarter.

However, Goodbody stockbrokers said in a note last Friday that while completions were up, commencements fell sharply, indicating a “flatter profile for output over the coming 12 months”.

In its quarterly bulletin in January, the Central Bank said the pandemic could result in 23,000 fewer new housing units being built over the 2020-22 period than it had predicted.

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