Construction sector contracts again in September

The construction sector contracted at a near record rate during in September, according to the latest figures from the Ulster Bank purchasing managers' index (PMI).

The index measuring the sector was at 32.2 in September compared with 33 in August, the fourth steepest decline in its eight-year history. A reading below 50 indicates contraction. September was also the 16th consecutive month of decline.

"While construction started the decline, it is now likely to be experiencing negative feedback loops," said Pat McArdle, chief economist at Ulster Bank. "The weakness in general activity is in turn having an effect on construction activity."

"It is noteworthy that input prices are now falling – only the third time that this has happened since June 2000," he said.

"This reflects lower diesel prices and falls in rates charged by sub-contractors which outweighed increases in a range of other inputs. Expectations regarding the future were largely unchanged, despite the negative news-flow in September."

For housing the measure was 25.5 in September, little changed from 25.4 in August. For commercial construction the index fell to 34.6 from 35 and the measure of civil engineering fell to 35.8 from 38.2.

More than 47 per cent of respondents indicated that new orders fell in September, with the latest contraction the third sharpest in the survey's history.

This led to jobs being lost last month in the sector. As a result the approximately 160 firms surveyed remained pessimistic.