Building sector continues to slow

The construction sector experienced another sharp fall in activity in November, the latest building industry index shows.

The building sector declined for the sixth month in a row in November, with the fall linked to lower volumes of new orders,according to the Ulster Bank Construction Purchasing Managers' Index.

Overall activity fell from 43.5 points in October to 42 points in November. Activity in the housing and commercial sectors fell, while civil engineering activity showed a slight increase.

However, the slowdown may have levelled off - activity in the building industry last month was not slowing as rapidly as in September, when the rate of slowdown was at its highest level in just over four years, according to the index.

The index is designed to measure the performance of the construction sector.

Pat McArdle, chief economist at Ulster Bank, said: "November was another weak month with contraction still the order of the day. However, there were some signs of a levelling off. Housing was an exception reaching a new low and, it must be said, at odds with official completions data which posted a high for the year in October. Builders seem to be finishing existing schemes, but not taking on new work."

Mr McArdle said he expected 55,000 new houses to be completed in 2008, down from between 75,000 and 80,000 house completions this year.

There was a sharp fall in employment at construction companies and in the volume of new orders in November. New business levels fell at their most marked rate since May 2003. New orders have been declining for the last eight months.

Building costs increased last month due to the higher price of oil and metals, though the rate of cost inflation slowed to its weakest level since January 2004. Reduced activity led to a substantial fall in purchases by construction companies in November.

Building firms were optimistic that activity levels will rise over the coming 12 months.