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Sun June 13 2021

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Decline in Irish construction quickens again

13 May 13 The contraction in the Irish construction sector deepened further during April, as the rate of decline quickened to the sharpest since September 2012.

All three monitored sectors posted falling activity, led by civil engineering.

New orders, employment and purchasing activity also fell at stronger rates than in March.

The Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – fell to 41.9 in April, from 43.1 in March. The latest reading pointed to the fastest reduction in construction activity in seven months.

Simon Barry, the chief economist Republic of Ireland at Ulster Bank, said: “There was a further deterioration in activity trends in Irish construction firms in April, according to the latest reading of the Ulster Bank Construction PMI. The PMI dipped to its lowest level since September of last year, as the pace of contraction quickened for the third month in a row reflecting renewed deterioration in both housing and commercial activity trends. While there was a slight easing in the pace of decline in civil engineering, this remains the weakest of the three sub-sectors, with the corresponding PMI languishing significantly below the 50 breakeven level at 34.1 last month.

“Construction firms continue to report a lack of new business as a critical issue. The new orders index fell to its lowest level since last November, as declining demand for new work as well as client uncertainty contributed to an accelerated rate of decline in incoming new business levels in April. This suggests overall activity levels will remain under pressure in the short term, though respondents continue to expect a rise in activity over the coming 12 months from current, extremely low levels.”

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All theree sectors – civil engineering, housing and commercial – posted falling activity. Civil engineering had been the only area covered to see a slower reduction in activity than in March.Commercial activity decreased sharply, with the rate of contraction the fastest since November last year. Meanwhile, the housing sector again posted the weakest reduction in activity, although the rate of decline accelerated.

Falling new orders and fragile client confidence were among the factors leading to the latest drop in activity. New business decreased for the sixteenth successive month, and at a faster pace than in March.

Declining workloads led construction firms to reduce employment during April. Moreover, the rate of job cuts quickened for the second month running to the sharpest in 2013 so far.

Falling demand contributed to a further decrease in purchasing activity during April, and at a substantial pace that was the steepest since November 2010. Despite reduced pressure on vendors, suppliers’ delivery times lengthened again during the month. Longer lead times were recorded for the 22nd month in a row, with anecdotal evidence suggesting that a low stock level at suppliers was the principal cause of delays.

Business optimism weakened for the second successive month in April although, on balance, firms still forecast growth of activity over the coming year. Panellists predicted that activity would show signs of improvement from current low levels.

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