Thursday, March 13, 2014

13/3/2014: Building & Construction: Weak Growth on Trend in Q4 2013


Yesterday, CSO published data on production volumes and values in Irish Building and Construction Industry covering the period through Q4 2013. Here are the details:

All Building & Construction:

  • Value of production in All Building & Construction in Ireland rose 11.77% y/y following a 20.67% rise in Q3 2013. This marks 5th consecutive quarter of increases in Value.
  • Value of production in All Building & Construction is now up 39.79% on Q2 2011, but is still down 71.74% on pre-crisis peak. It is 47.2% above the crisis period low.
  • Value index is now back at the levels last seen in Q4 2009-Q1 2010, but still significantly lower than in any quarter between Q1 2000 and Q4 2009
  • Volume of production in All Building & Construction in Ireland rose 10.97% y/y in Q4 2013 having posted a 20.0% rise in Q3 2013. This marks 5th consecutive quarter of no decreases in Volume, and a third consecutive quarter of increases.
  • Volume of production in All Building & Construction is now up 36.68% on Q2 2011, but is still down 72.9% on pre-crisis peak. It is 45.1% above the crisis period low.
  • Volume index is now back at the levels last seen in Q4 2009-Q2 2010, but still significantly lower than in any quarter between Q1 2000 and Q4 2009.


The trend up in the overall activity shown above is decomposed as follows for value and volume:

Key drivers for Value Index:
  • Building ex-Civil Engineering activity rose in Value by 28.4% in Q4 2013 compared to Q4 2012, accelerating previous increases and posting the third consecutive quarter of positive growth. Nonetheless, increases are taking place from very low levels, with index still down 78.26% on peak.
  • Residential building value activity posted a rise of 15.04% in Q4 2013 on Q4 2012, which is an increase on 8.8% rise posted in Q3 2013. Residential construction remains a major laggard, however. The index is up on 27.7% on its crisis period lows and is still down 91.5% on pre-crisis peak. Value in the sector is at around Q1 2011.
  • Non-residential building rose 36.27% in value between Q4 2012 and Q4 2013 and the index is now 75.9% above its crisis period low. Compared to pre-crisis peak, the index is down 'only' 29%. Non-residential building is a major driver of the upward dynamics in the overall Value index.
  • Civil engineering continued to shrink, with Value of activity in this sub-sector down 11% y/y in Q4 2013 and index down 35.8% on peak. However, previous gains in the index meant that Q4 2013 reading was 81.5% above crisis-period lows.


Key drivers for Volume Index:

  • Building ex-Civil Engineering activity rose in volume by 27.5% in Q4 2013 compared to Q4 2012. Nonetheless, increases are taking place from very low levels, with index still down 79.1% on peak.
  • Residential building value activity posted a rise of 14.1% in Q4 2013 on Q4 2012 and the index remains a major laggard: up only 25.8% on its crisis period lows and is still down 91.8% on pre-crisis peak.
  • Non-residential building volume rose 35.4% between Q4 2012 and Q4 2013 and the index is now 75.2% above its crisis period low. Compared to pre-crisis peak, the index is down 'only' 30.7%. Non-residential building is a major driver of the upward dynamics in the overall volume index.
  • Civil engineering continued to shrink, with volume of activity in this sub-sector down 11.6% y/y in Q4 2013 and index down 37.2% on peak. As with value, previous gains in the index meant that Q4 2013 reading was 64.7% above crisis-period lows.
So core conclusions:
  • Increases in sector activity point to a very sluggish upward trend in Building and Construction by Value and Volume. This trend is confirmed in Q4 2013, but the sector continues to struggle to show appreciable level gains.
  • Increases in Value and Volume are driven primarily by Non-Residential construction ex-civil engineering, with Residential building lagging in terms of growth rates, but still posting some gains.
  • Civil engineering sub-sector is the weakest of all, posting y/y declines in Q4 2013.
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