Brexit uncertainty triggers first construction fall-off in six years

Ulster Bank PMI says firms cited negative Brexit impact on overall demand conditions

The bank said the rate of new order growth eased for the third month running. Photograph: Krisztian Bocsi/Bloomberg

The bank said the rate of new order growth eased for the third month running. Photograph: Krisztian Bocsi/Bloomberg

 

Brexit uncertainty has triggered the first decline in Irish construction activity in over six years, according to Ulster Bank.

The lender’s latest construction purchasing managers index, which tracks activity in the sector, fell below 50 – the mark that delineates expansion from contraction – last month for the first time since August 2013.

The 48.3 reading for September was primarily driven by a fall-off in commercial activity. The bank said the rate of new order growth eased for the third month running and was the slowest in the current sequence of growth, which began in July 2013.

Construction firms, it said, highlighted the negative impact of ongoing Brexit uncertainty on overall demand conditions.

Housing remained the strongest sub-sector for a ninth month in a row, though the pace of residential activity growth eased to a 4½-year low. The other sub-sector, civil engineering, posted its 13th consecutive monthly fall in activity.

Dampened demand

In line with the softer rise in new business, Ulster Bank employment growth in the Irish construction industry eased to an almost six-year low during September, with respondents expressing their reluctance to take on additional staff amid a slowdown in activity levels.

“New orders moderated further last month, with the September reading marking the slowest pace of new business growth in over six years as many respondents reported that Brexit uncertainty is negatively weighing on customer demand,” Ulster Bank chief economist Simon Barry said.

“ In turn, the ongoing cooling in order flows continues to underpin slower – but still marginally positive – growth in demand for construction workers,” he said.