Industry sees further declines in activity last month

May 13, 2013May 13, 2013722 Views

The rate of decline in activity in the Irish construction sector quickened to the sharpest since September 2012 last month.New orders, employment and purchasing activity all fell at stronger rates than in March, the latest Ulster Bank construction purchasing managers index reveals.

The index fell to 41.9 in April from 43.1 in March – the biggest reduction in activity in seven months. Any figure under 50 signals contraction in the industry, while a figure over 50 signals growth.

The Ulster Bank index tracks changes in three areas of construction – housing, commercial and civil engineering.

All three monitored sectors reported decreasing activity, with the biggest falls seen in the civil engineering sector.Commercial activity fell sharply, with the rate of contraction the fastest since last November. The housing sector again posted the weakest reduction in activity, although the pace of decline accelerated from March.

Ulster Bank said that falling new orders and fragile client confidence were among the factors leading to the latest drop in activity. New business declined for the 16th month in a row while the rate of job cuts also accelerated for the second month in a row to the sharpest pace so far this year.

The bank noted that input costs increased again last month, but the rise was the slowest in the current nine-month sequence of inflation.

Business optimism weakened again last month, though companies still forecast activity growing over the next year.

”Construction firms continue to report a lack of new business as a critical issue,” commented Ulster Bank’s senior economist Simon Barry.

He pointed out that the new orders index fell to its lowest level since last November, as declining demand for new work and client uncertainty contributed to an accelerated rate of decline in incoming new business.

”This suggests overall activity levels will remain under pressure in the short term, though respondents continue to expect a rise in activity over the coming 12 months from current, extremely low levels,” he added.