Building activity drops as housing weakens
Construction activity fell for the second month in a row in June, according to the latest survey of the sector.
The AIB Ireland Construction PMI recorded 48.6 – down from 49.2 in May. Any figure below 50 means that activity fell.
Only the commercial sector (53.4) showed growth during the month, with housing (48.4) and civil engineering (41) both weakening.
John Fahey (AIB senior economist) said that, while the pace of reduction in the housing sector was modest, it contracted at a faster rate compared with May. It was also the weakest housing figure for almost 18 months.
Economic uncertainty
Companies linked falls in activity to economic uncertainty and muted demand conditions, although some firms noted that new contracts had been secured, and total new orders increased for the fifth consecutive month.
Employment also rose slightly in June, with firms saying that they hired new staff to help fulfil orders and work on future projects.
Companies remained optimistic that activity would increase over the coming year, with confidence reflecting expected improvements in demand.
Cost inflation slows
“An expected improvement in housing activity was cited as one of the reasons underpinning this perspective,” said Fahey.
Concerns about geopolitical issues and economic uncertainty, however, meant that the optimism figure eased to a three-month low.
While input costs continued to rise sharply, the June increase was the slowest since January, while the rates charged by sub-contractors rose at the weakest pace in four months.