Brexit hits construction for first time

The wave of business uncertainty caused by fears that the UK will crash out of the EU has now reached Irish construction, with output contracting last month for the first time since the economic recovery got underway in 2013.

Brexit hits construction for first time

The wave of business uncertainty caused by fears that the UK will crash out of the EU has now reached Irish construction, with output contracting last month for the first time since the economic recovery got underway in 2013.

The Ulster Bank Construction Purchasing Managers’ Index showed Brexit uncertainty weighed on demand, as commercial activity which covers the building of everything from offices, industrial facilities, and shops, receded, while civil engineering contracted further.

The overall measure of output in September at 48.3 (where any reading under 50 marks contraction) masked a better performance for housing output which still posted some limited growth in output from August and construction workers remain in demand.

Nonetheless, the latest reading in the survey for housing output will bring no comfort to the Government as the building industry continues to struggle to come anywhere near meeting the shortages of new houses that have sent rents soaring in many parts of the country.

And Ulster Bank said the pace of residential activity growth eased to a four-and-a- half-year low last month.

“Anecdotes from the survey highlighted that concerns about Brexit impacts were the key factor weighing on sentiment regarding the sector’s prospects for the incoming year,” said the bank’s chief economist in Ireland Simon Barry.

The construction survey chimes with evidence of the recent survey of purchasing managers who work for manufacturers that showed Irish factories were hit by the Brexit uncertainty too.

In a report last week, the Central Bank warned that matters for construction could get a lot worse should a no-deal come about and sees headline investment in the economy, which includes construction, contracting significantly in 2020.

However, even under an outcome where a deal is struck, the central bank projects the number of new houses that will be built will rise to 24,500 next year and to 27,000 in 2021, up from 22,000 this year.

Housing completions are seen by most economists as falling far short of the total required to help meet demand.

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