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Pace of decline in construction activity reduces as lockdown lifts

 

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Nadir: Ulster Bank’s Simon Barry said April was the point of ‘peak stress’ for the construction sector. Photo: Paul Sherwood

Nadir: Ulster Bank’s Simon Barry said April was the point of ‘peak stress’ for the construction sector. Photo: Paul Sherwood

Nadir: Ulster Bank’s Simon Barry said April was the point of ‘peak stress’ for the construction sector. Photo: Paul Sherwood

Activity in Ireland's construction market continued to decline sharply last month, but at a slower pace than was seen in April as the country remained in the grip of the pandemic lockdown.

The latest Ulster Bank Construction Purchasing Managers' Index (PMI) published this morning shows it notched up a reading of 19.9 in May. That compared to a reading of just 4.5 in April.

Any figure above 50 indicates expansion, and any figure below, contraction.

It's the third month in a row that activity has remained in sharp decline.

Ulster Bank's chief economist for the Republic of Ireland, Simon Barry, said the rise in the index last month reflected the easing of restrictions for the sector that started to be implemented from the middle of the month. He said that April was the point of "peak stress" for the country's construction industry.

Mr Barry added that other key indicators from the latest survey paint a similar picture, with the new orders and employment indices remaining firmly in contraction territory, but respondents reporting a less negative picture compared to April's record declines.

"Indications that at least the pace of deterioration eased last month following the easing of restrictions does lay the groundwork for clearer signs of outright recovery in the months ahead, depending of course on developments in relation to the virus itself," said Mr Barry.

He pointed out that construction firms' confidence about the coming year picked up in May, with the future activity index at a three-month high, with more than 37pc of respondents anticipating an increase in activity in the coming year, compared to 29.6pc in April and 16.6pc in March.

"On balance, construction firms remained pessimistic regarding the 12-month outlook for activity midway through the second quarter of the year," noted the survey. "Negative sentiment reflected concerns that the economic impacts of Covid-19 will be prolonged."

Commercial construction recorded the best performance last month, with an index reading of 25.6, compared to 3.1 in April.

Housing activity recorded a reading of 21.4 last month, compared to 4.9 in April.

The civil engineering segment posted a reading of 14.9 in May versus 5.2 in April.

Further reductions in employment were also recorded.

Irish Independent