Sunday, October 3, 2010

Economics 3/10/10: Construction sector - destruction continues

Nothing exemplifies the collapse of the Celtic Tiger than the fate of our indigenous 'flagship' sectors: Banking and Construction. The two fates, linked at the hip, got some very different treatment in the media this week. Banks received all the attention, yet Construction suffered a total neglect. Yet, last week CSO published Q2 2010 data for Construction sector.

Undoing any damage to the Construction sector's reputation as the 'leading newsflow' sector of Ireland Inc, let's update the data. Here are the charts, most of which, as often is the case, speak for themselves.

First volume and value in all sectors ex-Civil Engineering:
Next: Civil Engineering:
Interestingly, if you recall, since Budget 2009, this Government has consistently claimed that Ireland is getting a significant stimulus in the form of public investment - which, of course, in Government's parlance always means 'building stuff'. In fact, even after the imposition of the latest cuts in the Budget 2010, Civil Engineering spend (ok, investment) declined at the rates greater than the Government has planned for.

Residential and Non-Residential:
To see the real extent of our crisis in the Construction and Building sector, compare ourselves to the European counterparts:
And what about our previous claims that we don't belong to PIIGS?
What's amazing, of course is that despite this massive contraction, our housing and property markets continue to free-fall while employment in the sector continues to contract.


Anonymous said...

Only slightly related to the construction sector...

I presume that a significant section of homeowners in Ireland have or will need to refinance their mortgages as increased taxation/wage cuts/job losses impact on their ability to meet repayments.

I have yet to see a plain explanation of of the effects and implications of significant refinancing of debt.

What capital and liquidity implications does it have for the mortgage providers?

How does the current legislative environment and common lending terms impact on the ability to refinance?

What macroeconomic effects might refinancing have?

Are there potential macroeconomic benefits (through greater personal liquidity) of unforced refinancing?

If so, are those short term benefits outweighed by the long term costs even allowing for the current crisis of confidence?

Are there legislative or regulatory actions that the authorities that the Government should be taking to ease or even encourage refinancing?

Jason Loughrey said...

Some trends from Oz. Most of the value increase (02-10) appears to have been from the non-residential sector.

Jason Loughrey said...

Some trends from Oz. Most of the value increase (02-10) appears to have been from the non-residential sector.