Construction industry continues to contract

Construction industry continues to contract

Construction levels continue to decline

New figures show that the construction industry’s contraction deepened again last month, with both activity and new business falling at faster rates.

The Ulster Bank construction managers index dipped to 42.2 in July from 42.5 in June – its 62nd month of contraction in a row.

Ulster Bank also noted that the fall was the sharpest since September 2011.

Firms said that weak confidence among customers and poor weather conditions impacted negatively in activity in the sector, which includes housing, commercial and civil engineering.

Of the three monitored sectors, the biggest fall in activity was seen in civil engineering projects, were the rate of contraction was the fastest in four months. Commercial activity also declined at a faster pace than in June, but the pace of reduction in the housing sector slowed to the weakest since January.

Today’s PMI shows that Irish building companies cut their workforces again in July, as they have been doing since May 2007. Ulster Bank noted that the pace of reduction was the strongest in six months.

Strong competition and falling demand lead to the seventh successive fall in new orders at Irish construction firms. The fall was the sharpest since February 2010.

However, input costs fell in July, ending a 26 month sequence of inflation. Although firms continue to predict a rise in activity over the next 12 months, the level of optimism dropped in July to stand at its weakest level in three months.

”The latest reading of the Ulster Bank Construction PMI paints a downbeat picture of the Irish construction sector as the second half of the year got underway,” commented Ulster Bank’s chief economist Simon Barry.

He said that near-term prospects for the sector do not look encouraging. ”Signs of stabilisation in new orders around the turn of the year have given way to renewed weakness in recent months, in turn dampening hopes for a stabilisation in construction activity levels more broadly,” he said.

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