Challenging conditions continue but New Orders index rose to its highest level since March 2012

According to the Ulster Bank Construction PMI, the construction sector continues to contract, with employment levels still falling and lower purchasing activity, although sentiment about future prospects is improving.

The Index came in at 43.4 in June, which is an increase on the 42.0 posted in May. Anything below 50 denotes a contraction in activity.

Commenting on the survey, Simon Barry, chief economist Republic of Ireland at Ulster Bank, noted: “While survey respondents continue to experience very challenging conditions at present, some forward-looking elements of the survey offered some encouragement about future prospects. Notably, the New Orders index rose to its highest level since March 2012.

“The reading of 49.5 in June came very close to the 50 break-even level, thus tentatively hinting at a possible stabilisation in new business flows. And some optimism surrounding potentially better order levels boosted confidence among respondents, with sentiment regarding the 12-month outlook rising to its highest level since early 2007.”

The civil engineering sector saw a massive drop-off in activity between May and June, although residential building rose over the same period. New business continued to fall in June, but the rate of contraction was much slower than in previous months. The pace of job cuts accelerated over the month, while purchasing activity deceased again.

On a more positive note, Irish construction firms are more optimistic about the future. Sentiment was at its highest since January 2007.