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Dublin: 11 °C Friday 25 May, 2018

Sharp fall in construction continued in October

Index from Ulster Bank shows that the rate of decline has slowed – but is still heading downwards.

Civil engineering projects were particularly hit last month.
Civil engineering projects were particularly hit last month.
Image: Diego Cervo via Shutterstock

THE CONSTRUCTION SECTOR in Ireland continued to slow down in October, an index from Ulster Bank shows.

The Contruction Purchasing Managers Index showed that the rate of decline had slowed a little last month when compared to September – but at 42.6 for October, it is still way off the mark for the 50 benchmark which indicated an expansion in activity in the area.

This is the tenth successive month in which the level of new business in the construction sector has fallen. As a consequence of the ongoing slide, construction firms also lowered the number of overall staff in October. On average, one in five of those surveyed for the Index had cut jobs last month. There was also a reduction in construction supplies purchased last month. Higher energy and fuel costs were also cited by respondents.

Equally worrying was the note that respondents to the Index recorded their lowest level of optimism in about two years that there might be an increase in activity over the next year.

Simon Barry, chief economist at Ulster Bank, said the Index shows “widespread weakness” in Irish construction, right across housing, commercial and most especially, civil engineering projects.

He said:

New orders continued to decline in October so activity and employment trends are not likely to show much improvement in the near-term.  Adding to the woes of the sector, firms also reported rising input costs for the third consecutive month reflecting higher energy and fuel costs as well as some upward pressure on import costs from recent euro weakness.  A paucity of new business and rising cost pressures looks to be impacting on confidence among respondents as they look ahead, with sentiment falling to its lowest level in two years last month.

Earlier last month, the European Union’s statistics office, released the figures for construction across the EU zone for the month of August. It found that production in the sector had risen by 0.7 per cent. Portugal, Hungary and Romania were showing the biggest upturn.

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