Activity in construction industry sees first slowdown in 6 years

Activity in the construction sector contracted for the the first time in over six years in September, Ulster Bank’s latest Purchasing Manager’s Index reveals.

The PMI fell to 48.3 in September, a significant drop from 53.7 recorded in August.

Any figure under 50 signals a slowdown in a sector, while a figure over 50 signals growth.

September saw the first contraction in the construction industry since August 2013.

The slowdown was mainly accounted for by a fall in commercial activity, while the housing sector continued to post growth.

Ulster Bank noted that the housing PMI reading of 52.9 was still “comfortably” above the expansion threshold of 50.

It added that housing remained the strongest sub-sector for a ninth month in a row, though the pace of residential activity growth did ease to a four and a half year low in September.

Civil engineering firms posted their 13th consecutive monthly fall in activity, while commercial building decreased for the first time since July 2013, and at a solid pace.

Ulster Bank said that new business growth declined to its slowest pace in over six years as Brexit weighed on customer demand.

It also said the the Future Activity Index remained near August’s nine-year low with concerns about Brexit impacts the key factor affecting sentiment regarding the sector’s prospects for the incoming year.

As well as a smaller rise in new business, employment growth in the construction industry eased to an almost six-year low during September with firms expressing a reluctance to take on additional staff as a result of lower activity levels.

“Recent manufacturing and services PMI survey results have been signalling a deterioration in activity trends in some key areas of the Irish economy in recent months, largely reflecting the combination of weaker
global growth and growing risk of a no-deal Brexit,” commented Simon Barry, chief economist at Ulster Bank.

“The September results of the construction equivalent are suggesting that softer trends in the internationally-traded sectors of the economy are showing signs of spilling over into construction activity,” he added.

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