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Decline in building activity gathers pace


PMI figures show the construction sector continued to grow in July Photo: Thinkstock

PMI figures show the construction sector continued to grow in July Photo: Thinkstock

PMI figures show the construction sector continued to grow in July Photo: Thinkstock

The pace of decline in activity in the construction sector accelerated in March, with 30pc of firms reporting further falls in new orders during the month.

It marks the seventh consecutive monthly fall in new orders, according to new data from the Ulster Bank Construction Purchasing Managers' Index (PMI).

According to the latest PMI survey, the number of tenders continues to fall and where new work has become available, rates are being squeezed.

Increased input costs, including the soaring price of oil, are also proving a significant additional headwind for the industry.

The survey, used to track overall activity in the construction sector, also indicated that the number of jobs in the industry was again cut during March and noted that the rate of decline in employment "remained substantial".


The index fell to 46.1 in March from 47.8 in February. Any figure above 50 shows an increase in activity and a reading below that shows a contraction.

Releasing its full-year results last Friday, Irish concrete maker Readymix, which is controlled by Mexico's Cemex, noted that 2010 had offered "no respite from the ravages of the recession". The group slashed 17pc of its workforce as it posted a pre-tax loss of just over €19m.

Last month, the Central Statistics Office noted that the construction sector recorded the biggest fall in year-on-year employment in the fourth quarter of 2010, with nearly 27,000 workers losing their jobs to bring the total employed in the sector to just under 110,000. That's 60pc fewer that at its peak. The Ulster Bank PMI report also noted that, within the construction sector, the sharpest contraction in March was recorded in civil engineering activity, while work on commercial projects fell the most since August 2010.

"The pace of decline in housing accelerated to its fastest since December," said Ulster Bank's chief economist in Ireland, Simon Barry. However, he notes that, despite the difficult position the construction sector finds itself in, some firms are also optimistic that business could pick up.

"Despite the unfavourable backdrop of ongoing declines in new orders and higher input prices, almost half of the construction firms surveyed expect activity to be above the current depressed levels in 12 months' time," he said.

"In fact, the degree of positive sentiment around future activity was the highest in some four years last month."

Irish Independent