Spending fall and job cuts hit building sector hard
ACTIVITY in Ireland's construction sector fell again in April, the strongest drop so far this year, as companies reduced their spending and cut jobs.
The Ulster Bank Construction Purchasing Managers Index recorded that construction activity fell for the second successive month to 43.7, continuing the sharp fall in construction in each of the 47 months since the property market collapsed. The index monitors activity in housing, commercial and civil engineering every month, each of which was lower, with civil engineering showing the sharpest decline since December 2010.
Housing activity contracted substantially and at a faster pace than in March.
Ulster Bank chief economist Simon Barry said the ongoing declines in construction were in marked contrast to the improving trends evident in the internationally traded sectors of the economy. Manufacturing and exports have been buoyed by strong gains in export orders.
In contrast, construction is showing its weakest performance since last December, he said. Poor demand has prompted a fall in new orders and triggered further job losses.
"Staffing levels at construction firms have consistently fallen for the past four years, leaving construction a distance behind manufacturing and services where there are signs of job creation," Mr Barry said.
Despite the ongoing weakness in construction, he said firms remained hopeful that stability in the economy would lead to an improvement in activity over the coming year.
Also reflecting the latest drop in workloads, Irish construction firms cut back on purchases in April at a more pronounced rate.
Input prices rose sharply again last month and the rate of increase in input prices accelerated for the second consecutive month since July 2008. According to Ulster Bank, higher oil prices have been the key factors behind inflation.