Construction sector contracts at slower rate

IRELAND’S CONSTRUCTION sector continues to contract but at its slowest rate in almost three years. Ulster Bank’s Purchasing Managers’ Index (PMI), which has been tracking activity in the sector since 2000, rose to 44.9 in June, up from 40 the previous month.

The index has been below 50, which indicates contraction, for 37 months.

While new orders, employment and purchasing activity in the sector all fell during the month, they did so at slower rates, suggesting a marked easing in the pace of decline.

Of the three areas monitored by the survey, civil engineering was the only sector to see the rate of decline accelerate, falling from 40.1 in May to 38.4 last month.

Although the pace of contraction remained sharp in the housing and commercial sectors, the rates of reduction both eased markedly since May.

For housing, the figure for June was 45.4, up from 40.0 in May, while the index of commercial building rose to 45.8 in June, up from 39.9 the previous month.

“While activity continues to decline in both areas, the latest trends are moving in the right direction, with the pace of decline at multi-year lows in each case,” said Simon Barry, chief economist with Ulster Bank.

“The same cannot be said of the June reading of the civil engineering index, which bucked the more positive trends elsewhere in the report by showing a decline last month – a reflection, perhaps, of the sharp pull-back in Exchequer capital spending,” Mr Barry said.

Although new construction orders overall fell the least since August 2007, the report warned that anecdotal evidence suggested “intense competition still made new business difficult to secure”.