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Building activity hits new low (The Irish Times)

04 November 2011

Construction activity declined to a record low last month, as employers in the industry continued to lay off workers after new business dried up.

The Ulster Bank purchasing managers index (PMI) for the construction industry shows that commercial construction activity fell significantly in May, although activity in the civil sector improved slightly and the decline in housing construction appeared to level off.

The fall-off in commercial construction was the sharpest contraction in five years. However, the housing sector remains the worst performing of the three sectors in the construction industry - a position it has held since August 2006.

At an overall index level of 33.9 - far below the 50 mark that separates expansion from contraction - the construction PMI dropped to a new low in the history of the survey, with activity contracting in each month of the past year.

Construction employment fell at a substantial pace in May, reflecting the declining volumes of new orders, which were in turn linked to deteriorating domestic demand conditions.

The survey findings suggest that the industry's overall performance is likely to worsen before it improves.

Ulster Bank chief economist Pat McArdle said: "The record low in employment mirrors weak new orders, indicating a poor outlook for construction activity in the coming months."

However, despite a sense of pessimism in the industry about the prospects for future work, Mr McArdle added that there would be no major new deterioration in the housing sector.

"We maintain the view that, while housing will remain in contraction for some time, any significant worsening is unlikely."

Figures published by the Central Statistics Office last week showed that there were 9,800 fewer workers in the construction industry in the first quarter of 2008 compared with the same period a year earlier.

The number of employees fell by 16,900, but this was partially offset by a 7,100 increase in the number of self-employed people, as workers laid off from construction sites turned to the repair, maintenance and improvement sector.