Activity at Irish construction companies
continued to fall in November, although the rate of decline slowed. New business
declined marginally as clients remained cautious regarding economic conditions.
Meanwhile, firms reduced employment again, and at a substantial pace.
The Ulster Bank Construction Purchasing Managers’
Index (PMI) -- a seasonally adjusted index designed to track changes
in total construction activity - - increased for the second month running
to 47.7 in November, from 45.2 in October. The reading represented the weakest
fall in activity in the sector since February, but extended the current sequence
of contraction to four-and-a-half years.
Commenting on the survey, Simon Barry,
chief economist Republic of Ireland at Ulster Bank, noted that:
“The November results of the Ulster Bank PMI survey offered some slight
encouragement in terms of the latest trends in Irish construction. We noted last
month that the New Orders index managed to exceed the key expansion-contraction
threshold level of 50 for the first time in 13 months.
It did edge fractionally
lower in November, but at 49.8 is just fractionally below the breakeven level
and the trend in this index is tentatively suggesting that the multi-year slump
in new business may be entering its final phase. It is important not to overplay
this point, however, as even the deepest and most protracted downturns
eventually come to an end, so the indication of a less negative trend in new
business in Irish construction is really a function of the severity of the
declines seen over the past four and a half years.
“Moreover, whatever the tentative signs of
stabilisation in new orders, the November survey results show further declines
in actual activity levels across the sector. The PMIs for each of Housing,
Commercial and Civil Engineering all remained below 50. Civil Engineering was
again the weakest sub-sector, as the ongoing retrenchment in the Exchequer
Capital Programme continues to contribute to this area’s underperformance.
However, the overall PMI did rise by 2.5 points in November to stand at 47.7.
This is the highest reading since February,
and is consistent with an easing of the pace of decline in overall construction
activity. This was especially the case in the Commercial sector where the
activity index rose to its highest level in fifteen months and, at 49, is now
flirting with the breakeven mark. Elsewhere in the survey, there was a marginal
uptick in firms’ confidence about future business activity, but perhaps next
month’s results in this area will be of more interest in terms of whether there
will be any end of year boost to sentiment from the support measures targeting
the property sector introduced in last week’s Budget.”
The number of firms polled has not been supplied,
which suggests that the sample is small.
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