New figures show that activity in the construction sector fell back in August after two months of growth.

The Ulster Back Construction PMI recorded 44 in August, down from 53.2 in July and below the 50 mark for the first time in three months. Any figure below 50 means that activity dropped.

The decline, however, was not as steep as that seen in April and May, when COVID-19 restrictions halted most building work.

Uncertainty

Ulster Bank said that while some companies continued to see activity levels recover following the loosening of restrictions, this was outweighed by those firms reporting that uncertainty and general economic weakness had a negative impact on workloads.

Activity was weaker in all three parts of the index, with the housing figure falling to 44.7 and civil engineering recording 42.3.

The biggest drop came in the commercial property sector, where the figure was 41.6.

“High levels of market uncertainty linked to the effects of the pandemic and some recent signs of a cooling in the wider economy’s recovery momentum weighed on the August results, including in relation to sentiment about the sector’s future prospects,” said Ulster Bank economist Simon Barry.

Optimism

He added, however, that construction firms had continued to express optimism about the outlook for the year ahead, reflecting expectations that the economy’s recovery would stay on track.

Mr Barry said it would be surprising if the housing part of the index did not show renewed improvement in the months ahead, as other indicators continued to signal strong activity in the sector.

The survey showed that costs for construction firms rose again due to difficulties in sourcing some items, while suppliers’ delivery times were longer.

Companies reported that COVID-19 continued to cause disruption to supply chains, with particular issues when sourcing materials from abroad.