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Rate of decline in construction activity unchanged in November

Jobs were also being cut at a sharper pace during the month, in line with reduced workloads, according to the latest Ulster Bank Construction PMI.

Image: Pressmaster via Shutterstock

CONSTRUCTION ACTIVITY FELL sharply again in November as new orders declined at an accelerated pace, according to the latest Ulster Bank Construction Purchasing Managers’ Index (PMI).

Jobs were also being cut at a sharper pace during the month, in line with reduced workloads, and firms lowered their input buying.

Meanwhile, the rate of input price inflation quickened again, with the latest rise mainly reflecting higher fuel costs. The Ulster Bank Construction Purchasing Managers’ Index – a seasonally adjusted index designed to track changes in total construction activity – remained unchanged at 42.6 in November, signalling a further sharp monthly reduction in activity at Irish construction firms.

Commenting on the survey, John Fahey, Economist Republic of Ireland at Ulster Bank, said that business conditions remain “very tough” for Irish construction firms.

“The latest survey results show that while the pace of contraction in overall activity was unchanged from October levels, the reading of 42.6 indicates activity continues to fall sharply,” he said.

“The sharpest contraction was recorded in civil engineering, which retained its tag as the weakest of the three sectors, although both the housing and commercial activity indices continue to be some way below the expansion threshold of 50. Not surprisingly, given the ongoing contraction in activity, the sector remains in job shedding mode, and in fact the pace of contraction in employment levels was at its sharpest since May 2011.”

Although the rate of contraction observed in the in civil engineering sector eased slightly, it remained substantial. The housing sector posted the weakest reduction during the month, with the rate of decline easing to the slowest since January – while commercial activity decreased at a sharp and accelerated rate.

In terms of the outlook, the construction sector is the lack of new business opportunities, according to Fahey. The new orders index, an important lead indicator, fell at a faster pace compared to a month earlier and in the process registered its eleventh consecutive month of contraction.

“The provision in Budget 2013 for the establishment of Real Estate Investment Trusts (REITs) may provide some support for the property sector over time. Overall though, the near term prospects for the construction industry remain weak and the sector will continue to face a challenging outlook in the coming months,” he said.

The contraction of new business continued, with new business declining for the eleventh successive month in November at a faster rate than seen in October. Fragile confidence was cited as a reason for the decline.

Read: Work to start on €370m Luas link-up next year

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