Index shows sharp decline in construction continuing

ACTIVITY IN the Irish construction sector continued to decline sharply in July, although the pace of the fall eased slightly, according to the Ulster Bank construction purchasing managers index (PMI), published yesterday.

The seasonally-adjusted index rose for the second month in a row to 37.9 in July, from 36.3 in June. This represented the slowest contraction of business activity in the sector since November 2007.

Any figure below 50 indicates a fall in activity.

Commenting on the survey results, Ulster Bank economist Simon Barry said: “Activity in the Irish construction sector remains weak. However, the overall PMI continues to pick up from its record low in January. The July reading of 38.4 was the highest since November 2007 as the index rose for the fifth month in six.

“This pattern is consistent with the theme that the rate of contraction in the sector is continuing to ease somewhat from the extreme weakness picked up by the survey at the beginning of the year.”

Each of the three sectors within construction monitored by the survey posted declines in activity during July.

The sharpest contraction was in the residential area. Housing activity recorded 31.3 in July compared with 33.4 in the previous month.

Commercial activity was broadly flat at 38.7, while the rating for civil engineering rose to 36.1 from 30.9 in June.

Ulster Bank said job shedding “intensified” in July as firms adapted their workforces to lower new order levels. Employment has fallen continuously since May 2007.