Construction activity near record low

New research by Ulster Bank suggests that activity in the Irish construction business remained near record lows in March, according to a report published this morning.

Although activity levels measured by its construction purchasing managers index rose to a four-month high,  the reading of 36.6 is still the fourth lowest on record.

An index reading below 50 signals a decrease in activity on the previous month and the index has declined for the last 10 months. The report also said the rate of decline in construction employment accelerated to a survey high.

According to UIster Bank the results "indicated a substantial deterioration in business conditions in the Irish construction sector".

However, the index offers some hope that the rate of decline in activity is levelling off, according to Ulster's chief economist Pat McArdle.

"Signs last month that there was some levelling off in the rate of decline in construction activity were again evident in March, when all three sub-components posted slightly higher numbers.

"However, the numbers remained below 50, indicating that activity in March was down significantly on last month".

He said the rate of decline in construction employment was accelerating and that the full impact of this "has yet to show up in the official Central Statistics Office's  Quarterly National Household Survey data. We expect the first quarter QNHSdata to show a significant decline in construction employment."

The index found that new orders continued to fall sharply in March, with around 40 per cent of construction firms recording a decline.

The gauge measuring civil engineering rose to 37.8 in March compared to 36.9 in February while the 
homebuilding measure rose to 27.6 from 27.5. The mmercial construction index increased to 46.4 from 43.7.

Last Friday the index of employment in construction from the Central Statistics Office (CSO) showed that employment in the construction industry was continuing to fall.

The index, which analyses job levels in private construction firms with five or more employees, contracted further in February and was down 11.1 per cent compared with February 2007.

The monthly employment index is at near five-year lows.

New housing registrations have fallen 67 per cent over the first three months of the year compared with the same period last year.

Around 45,000-50,000 new housing units are expected to be built this year, compared to 78,000 in 2007.