6 | THE LOCAL NEWS
Construction activity falls again AEC Electrical
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AUGUST data indicated that overall operating conditions in the Irish construction sector continued to deteriorate during the month, despite a marginal increase in new business. Activity and employment both fell further, extending the current periods of decline to thirtynine and forty months respectively. The Ulster Bank Construction Purchasing Managers’ Index™ (PMI™) – a seasonally adjusted index designed to track changes in total construction activity – remained below the no-change mark of 50.0 in August, signalling a further reduction of activity in the sector. However, the reading of 48.4 – up from 45.0 in July – indicated that the rate of contraction was the weakest in the current sequence (which began in June 2007). According to respondents, lower activity reflected continued uncertainty among clients. Commenting on the survey, Lynsey Clemenger, Economist at Ulster Bank, noted that: “While the Manufacturing and Services PMIs have signalled expansion over the past 5-6 months, the latest reading of the Ulster Bank Construction PMI reveals that operating conditions in the Irish construction sector remain particularly tough. “In fact the PMI is telling us that the sector has been in contraction for 39 months now, by far the longest period of decline in the survey history. In terms of the detail, activity declines remain broad-based across the three main subsectors housing, commercial and civil engineering. Furthermore, with new work remaining scarce, and the continuing focus on cost containment, employment levels across the sector fell for the 40th consecutive
month.“However, there were also some tentative signs of encouragement in the latest survey. Even though activity is still contracting, the rate of decline continues to ease, with the headline index now at its highest level since May 2007. In addition, new orders rose for the second month running in August, albeit that it is important to point out that the in-
crease was very marginal. Nevertheless, this explains in part the continued optimism amongst construction firms that activity in a year’s time will be higher than the extremely depressed levels that prevail at present. While these signals are welcome, they should be viewed in the context of what has been an extraordinary period of weakness for the
Irish construction sector over the last 3 years or so.” New orders rose for the second consecutive month in August. However, the rate of expansion was again only marginal as tenders remained difficult to
secure. With projects reaching completion and new work rising only slightly, Irish constructors cut employment sharply in August. Job cuts have now been recorded in each of the past forty months.
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