Cause for optimism as building-activity contraction slows
THE contraction in Ireland's construction market has slowed to its lowest rate since June 2007, suggesting a tentative recovery in the sector.
The slowing rate of contraction is revealed in the latest Purchasing Managers Index (PMI) from Ulster Bank, which charts the sector's expansion or contraction against a breakeven reading of 50.
August's instalment posts a reading of 48.4, significantly better than the dip below 30 earlier in the year and ahead of the 45 recorded in July.
All three core areas -- housing, commercial and civil engineering -- posted improving trends in August, although all three categories remain below the magic 50.
"There were some signs of tentative encouragement in the latest survey," said Ulster Bank economist Lynsey Clemenger. "Even though activity is still contracting, the rate of decline continues to ease."
The biggest improvement was seen in housing, where the reading surged from a weak 40.8 in July to 47.4 in August.
Commercial remains the healthiest sector, with July's 46.0 reading rising to 49.7, while civil engineering went from 43.6 in July to 44.5 in August.
Further encouraging signs are evident in construction companies' outlook, with most expecting activity to be higher in 12 months than it is now.
August's figures marked the 39th month in a row when construction activity fell, marking "by far the longest period of decline in the survey history", Ms Clemenger said.
That decline has continued even though similar surveys that measure services and manufacturing have both returned to growth in recent months.
The latest construction survey also signalled more bad news on the jobs front, noting a "sharp" fall in employment in August against "projects reaching completion and new work rising only slightly".
About 150,000 construction jobs are already believed to have been lost across the industry since the peak in 2009.