Construction activity rises marginally

Activity in the Irish construction industry expanded marginally in May, after a forty-three month low in April.  Despite the expansion in activity, employment declined last month, according to the Ulster Bank Construction Purchasing Managers’ Index – a seasonally adjusted index designed to measure the overall performance of the construction economy. Lower new order levels and planning delays were blamed for the decline in activity.   Commenting on the survey, Pat McArdle, Chief Economist at Ulster Bank, noted that: ‘Housing weakened further in May but commercial rebounded on cue and civil was also strong. However, housing dominated, as it accounts for over 60 percent of the total and its decline was sufficient to offset increased rates of activity in the other two areas, leaving overall construction activity broadly unchanged.             ‘The big difference now as compared with earlier weak periods in 2001 and 2003 is that then all three sub-sectors contracted, whereas now we have two strong and one weak. The consequence is that total activity is stagnating rather than falling.             ‘Having said that, we note that employment began to fall in May. This reflects both the size of the housing sector and the fact that it is more labour intensive than the others. With confidence fragile, the sharp curtailment of housing activity is welcome as a lower supply should help prevent greater falls in house prices.’