CIVIL ENGINEERING is now the weakest performing part of the construction sector, according to a “disappointing” new snapshot of building activity in September.
The Ulster Bank purchasing managers’ index (PMI) for the construction sector signals that business conditions in Ireland’s beleaguered building industry worsened last month, with the sharper contraction ending a run of three months in which the decline eased slightly.
There was a “severe” contraction in civil engineering activity in September, while housing and commercial construction also fell back. The index gave a reading of 34.2 during the month, well below the 50 mark that separates growth from contraction.
Jobs were shed at the fastest pace since May, while new business declined for the 30th consecutive month as clients remained cautious about committing to new projects given the fragility of the economy.
“The construction PMI remains well off the record lows seen earlier in the year, but the downside surprise in the latest reading serves to highlight the ongoing contraction in the sector,” said Ulster Bank economist Simon Barry.
However, he said there was one “relative bright spot” in the index, which recorded “modest optimism” regarding future prospects for activity.
The deterioration in civil engineering activity follows figures from the Department of Finance in the September public finances data, which showed that capital spending is declining 13 per cent year-on-year and is also running 8.5 per cent behind targets set by the Government in April.
The Department of Finance said earlier this month that the fallback in spending compared to projections was a “timing issue” and that capital spending would come in on target by the end of the year.
Mr Barry said it was difficult to confidently identify the reason why civil engineering activity might decline in any one month, but said that the timing issues could be a reason.
“Capital spending might be slipping a bit behind plan and that could be weighing on that particular subsector of construction,” Mr Barry said.
