Data shows construction activity at seven-year low

Activity in Ireland's construction industry fell in December to its lowest levels in seven years, according to a study published today.

The Ulster Bank construction purchasing managers' index (PMI) fell to to 35.7, the lowest since the series began in June 2000, from 42 in November.

The contraction of the construction economy is mainly due to a fall in house completions.

"House completions are declining at record rates", said Pat McArdle, chief economist at Ulster Bank. "As housing is two-thirds of construction, this dragged overall construction activity into negative territory since mid-2007.

"However, December was unusual in that the other two components - commercial and civil - also contracted," Mr McArdle added.

He said the outlook remained poor as orders and employment are also at a record lows. Data for December signalled a marked degree of pessimism among Irish construction firms, according to Ulster Bank. More than 36 per cent of firms expected activity to be lower at the end of 2008.

This negative outlook was attributed to a shortage of new work for tender and tight credit conditions. Constructors were at their most pessimistic for fifty-three months.

CSO data also released today showed that employment in construction fell by 5.4 per cent in November 2007 from a year earlier. The drop brings employment in the sector to its lowest level since December 2004.

October 2007 showed a decrease of 4.7 per cent, when compared with October 2006, according to final data from the CSO.

Labour spokesman on Enterprise Trade and Employment Willie Penrose said: "There can be little doubt that the slowdown in the construction sector has taken hold and will continue to lead to significant additional job losses in the coming year."

"The Government must make sure that there are adequate resources dedicated to providing retraining for these workers, who are predominantly young men."

Fine Gael enterprise, trade and employment spokesman Leo Varadkar called on the Government to "wake up to the threat facing the economy".

"These figures show that the downturn in construction activity is not just confined to domestic house building, but is having a broader impact on jobs," he said. "It is clear that the Fianna Fáil Government's self-perpetuated reputation for economic competence was built on very shaky foundations.