Building industry decline accelerates

THE BUILDING industry’s decline accelerated last month, dashing hopes that the recession in the sector was about to ease.

Ulster Bank’s Construction Purchasing Managers’ Index for September shows that the amount of new business declined sharply in that month.

The index returned a reading of 44.5 for the period. Any result below the benchmark 50 means a fall in activity on the previous month, any number above that indicates growth.

The August reading was 48.4, so the 44.5 figure for September shows that the rate at which the industry is declining accelerated during the month.

Ulster Bank chief economist Simon Barry said the sector “experienced renewed weakness” last month. “The sector has been in contraction mode for 40 months now, but the latest reading showed an acceleration in the rate of contraction as the index fell to its lowest level since May.”

He added: “The index remains well off its record lows seen in early 2009 which is an indication that the sector is not contracting as severely as at the extreme point of the cycle. However, the September reading is nevertheless disappointing as it represents a reversal of the gains of the previous three months.”

Mr Barry added that civil engineering was particularly badly hit.

Civil engineering, which is mainly large, publicly-funded projects, fell to 39.3 from 44.5 in August. Housing was 42.5 and commercial building was 45.9.

New orders fell during September having increased slightly in July and August. Consequently, last month’s activity is seen as a further setback for the industry.

As a result, builders’ confidence was at a nine-month low in September, although a majority of those questioned still expect this year to turn out better than 2009.

“It appears that greater concern about the outlook for the wider economy weighed heavily on firms’ expectations about future business activity – not all that surprising perhaps given the negative news flow related to the banking sector and the public finances last month,” Mr Barry said.