11/12/2012: Construction Sector Activity in Ireland - Q3 2012

Horrible numbers out today for the Irish Building & Construction sector.

Per CSO: "The volume of output in building and construction was 4.2% lower in the third quarter of 2012 when compared with the preceding period. This reflects decreases of 5.3%, 2.4% and 1.9% respectively in the volume of residential building, civil engineering and non-residential building. The change in the value of production for all building and construction was -2.1%. On an annual basis, the volume of output in building and construction decreased by 10.8% in the third quarter of 2011. The value of production decreased by 8.5% in the same period."

Now some details:

• Value Index for ex-Civil Engineering work stood at 17.5 in Q3 2012 (100=2005 activity levels), down 15.5% y/y, marking 23rd consecutive quarter of declines (! give that number a thought).
• Worse, ex-Civil Engineering Value index is down 2.23% q/q, down 10.15% for Q2-Q3 2012 compared to Q4 2011-Q1 2012 6mo periods and down 14.5% for the 6 months through Q3 2012 compared to same period in 2011.
• The rate of annual decline in the index has accelerated since Q4 2011.
• Volume Index for ex-Civil engineering work fell to 15.5 in Q3 2012 from 15.9 in Q2 2012. The Index is now also down consecutive 23 quarters. The annual rate of decline continued to accelerate for the fourth quarter in a row.
• In 6 months through Q3 2012 index fell 15.82% compared to same period of 2011. Quarterly index change is -2.52%.
• Relative to peak, Value Index in ex-Civil Engineering sector is now at 15.39% and Volume Index is at 14.57%.

In Civil engineering sector things are bouncing at the bottom - a pattern that is now running solidly from Q3 2010:

• Value Index for Civil engineering slipped to 63.0 from 64.6 in Q3 2012 compared to Q2 2012, marking a decline of 2.48% q/q. However, due to massive jump in Q2 (+16.2% y/y), index is still 9.2% ahead of Q3 2011 reading. This side of the Index is likely to suffer in 2013 due to Budget measures on capital spending.
• Volume Index of Civil Engineering also fell from 57.5 in Q2 2012 to 56.1 in Q3 2012 (-2.43% q/q), although the index is up 7.9% y/y in Q3 2012 (due to a one-off substantial rise of 14.8% in Q2 2012).

Overall, based on simple averages, activity in Civil engineering remained broadly unchanged - at absolute lows - since Q3 2010, averaging between 63.3 for the Value Index and 56.3 for the Volume Index. This dynamic is simply inconsistent with any talk about economic turnaround.

Misery comparatives for the sector are self-evident when looking at residential and non-residential indices:

• Value of Residential Construction reached another historical low in Q3 2012 - hitting 8.2, down from 8.5 in Q2 2012. This means that activity by value in this sub-sector is now down 91.8% on 2005 levels or 92.8% on pre-crisis peak. The Index has been posting annual rates of decline in every quarter since Q1 2007, or 23 quarters in a row. The rate of decline (y/y) also accelerated since Q1 2012.
• Volume of Residential Construction is down from 7.6 in Q2 2012 to 7.2 in Q3 2012. Again, this implies that volume index is now down 92.8% on 2005 level and 93.0% down on pre-crisis peak. Annual rate of decline accelerate to 20% in Q3 2012, the highest rate in 4 quarters. The index has now posted 26 consecutive quarters of annual declines.
• Non-residential Construction Value Index fell from 53.5 in Q2 2012 to 52.5 in Q3 2102, with annual rate of decline accelerating to 15.5% in Q3 2012, marking third consecutive quarter of annual declines. The index is now 57.4% down on pre-crisis peak.
• Non-residential Construction Volume Index is down from 47.5 in Q2 2012 to 46.6 in Q3 2012, marking an accelerated annual rate of decrease of 16.3% in Q3. The Index is now down 58.4% on pre-crisis peak.

If anything the above dynamics clearly show that the rates of activity collapse are accelerating through Q3 2012, nto ameliorating or turning to positive growth. Both series dynamics, therefore, are consistent with worsening of economic conditions, not stabilization or a turnaround.

I will blog on European countries comparatives in the next post.

27/9/2012: Planning Permissions, Ireland, Q2 2012

Planning Permissions for Q2 2012 were published today for Ireland, offering basically continuation of the trend established the end of 2010 which marks slower rate of decline in overall planning permissions. Chart below illustrates:

Total number of planning permissions rose 9.03% q/q in Q2 2012 to 3,672 (still 13.48% down on Q2 2011 and 78.8% down on peak).

In Q2 2012, overall number of planning permissions in Ireland for new dwellings dropped to 942 from 957 in Q1 2012 (-1.57% q/q), which is down 25.47% y/y and down 87.5% on peak. In contrast with new dwellings, other new construction permissions rose from 695 in Q1 2012 to 828 in Q2 2012 (up 19.14% q/q and up 14.84% y/y), which is still down 86.7% on peak.

Annual rates of change clearly show that the slowdown in the rate of decline is now persistent over two quarters for total number of planning permissions, while there is an acceleration in the rate of decline in the planning permissions for new dwellings.

Average square footage relating to new permissions granted is now moving sideways since Q3 2011, suggesting there is really no life in the market for new construction, even in the potential pipeline of work planned.

Sorry to say this, but no good news here.

24/9/2012: Irish Building & Construction decline v EU27

Last post on Irish Building & Construction sector data for Q2 2012. Here are the comparatives for EU member states based on current activity (through Q1-Q2 2012) compared to 2006-2007 peak levels:

No need to comment on the above...

24/9/2012: Irish Building & Construction Sector Activity Q2 2012

And in another post prompted by @stephenkinsella tweet, here's an update on CSO data for Irish Building & Construction sector activity:

Ex-Civil Engineering:

• Value index fell to 17.6 in Q2 2012 from 18.7 in Q1 2012, marking 5.88% decline q/q and down 15% y/y.
• H1 2012 Value index is down 12.11% on H2 2011 and down 13.78% on H1 2011.
• Value index fell to 15.5% relative to the peak and volume index declined to 14.66% of the peak level
• Volume index dropped to 15.6 in Q2 2012 down on 16.7 in Q1 2012, marking a 6.59% decline q/q and 16.6% decline y/y. 
• H1 2012 volume index was down 13.17% on H2 2011 and down 14.55% on H1 2011.
• Both Value and Volume indices are now down on an annual basis for 22 consecutive quarters.

Civil Engineering:

• Value of Civil Engineering activity rose from 58.4 in Q1 2012 to 62.7 in Q2 2012 (+7.36% q/q) and advanced 11/4% y/y, registering the first annual rate of increase after 15 quarters of contraction.
• H1 2012 value index rose +1.68% on H2 2011 and is up 5.21% on H1 2011.
• Volume of activity also grew from 52.3 in Q1 2012 to 55.8 in Q2 2012 (+6.69% q/q and +9.8% y/y) also breaking for the first time annualized contraction period of 18 quarters.
• H1 2012 volume index rose 0.93% on H2 2011 and is up 4.75% on H1 2011.

Residential and non-residential:

• Residential construction value index fell from 9.1 in Q1 2012 to 8.6 in Q2 2012 (-15.7% y/y and -5.49% q/q). H1 2012 index was down 9.69% on H2 2011 and down 16.51% on H1 2011. Relative to peak, the index is now down 92.45%.
• Residential construction volume index fell to 7.7 in Q2 2012 from 8.3 in Q1 2012 (decline of 7.23% q/q and down 17.2% y/y). The index is now down 92.53% on peak.
• Non-residential construction value index fell from 55.4 in Q1 2012 to 51.5 in Q2 2012 (-14.7% y/y and -7.04% q/q). H1 2012 index was down 14.41% on H2 2011 and down 12.23% on H1 2011. Relative to peak, the index is now down 58.23%.
• Non-residential construction volume index fell from 49.4 in Q1 2012 to 46.0 in Q2 2012 (-15.8% y/y and -6.88% q/q). H1 2012 index was down 15.12% on H2 2011 and down 12.48% on H1 2011. Relative to peak, the index is now down 58.89%.

To sum up: rates of decline are (annually) in double digits and/or accelerating in Q2 2012 in Residential (value and volume), Non-residential (value and volume) and ex-Civil Engineering (value and volume). Residential construction is now at 8.6% of 2005 levels in value terms and 7.7% of 2005 levels in volume terms. Non-residential construction is now at 51.5% of 2005 levels in value terms and 46% in volume terms. Civil Engineering activity is now at 62.7% of 2005 levels in value terms and at 55.8% in volume terms. All activity ex-civil engineering is now down to 17.6% of 2005 levels in value terms and 15.6% in volume terms.

24/9/2012: Euro peripherals Building & Construction activity

Here's a chart updating to latest data index of Building & Construction sector activity in the peripheral euro area states:

As inspired by @StephenKinsella: "Ouch!"

29/6/2012: Irish Planning Permissions: Q1 2012

After 5 years of continued destruction in the construction sector in Ireland, one simply has to re-test the accepted paradigms that things can continue falling indefinitely. I mean, yes, there's a bound to how far down new construction permits for new dwellings can go, but... who would have thought it might be a zero?

Here are the latest stats on approved Planning Permissions in Ireland for Q1 2012. Not a pretty sight - be warned.

In Q1 2012, number of new planning permissions for new dwellings stood at 957 - a new all-time low for Q1 figures, up 0.2% on Q4 2011, but down 25.1% year on year. Compared to peak, the number of new dwellings being planned in Ireland is now down 87.3%.

Other New Construction permits rose to 695 in Q1 compared to 681 in Q4 2011, but Q1 figure this year is the lowest of all Q1 readings in history. Y/y permits are down 0.7% and compared to the peak, they are down 88.8%.

Extensions approvals rose from 1,312 in Q4 2011 to 1,339 in Q1 2012, marking another historical low for Q1 figures, down 18.2% y/y and now 74.3% below their peak.

Alterations and Conversions permits rose to 377 from 335 in Q4 2011 and are now at a new historical low for Q1 readings. Y/y permits dropped 6.9% and relative to peak they are down 55.0%.

Thus, total construction permits awarded are now at 3,368 in Q1 2012, new historical low for Q1 readings, but up on 3,283 in Q4 2011. Y/y all construction permits are down 16.2% and reltive to peak they are off 80.6%.

These are ugly numbers, folks.

Charts to illustrate:

15/6/2012: Q1 2012 Construction Sector Activity for Ireland

Having dealt with leading indicator for Construction sector activity - Ulster Bank PMIs - in the previous post, now's the time to update the latest actual outrun figures from the CSO that cover Q1 2012. Keep in mind - core conclusion in the previous analysis showed no signs of uptick in activity in the sector, with housing and commercial real estate construction activity continuing to shrink.

Pre latest CSO data:

• In Q1 2012 Value of all activity ex-Civil Engineering has fallen to 18.7 against 20.6 in Q4 2011. Quarterly rate of decline therefore is -9.22% for value against the annual rate of decline of -13.4%. Y/y rate of decline accelerate from Q4 2011 when it was 8.4%. Over last 6 months the index declined -5.07% compared to previous 6 months and -10.88% y/y. Q1 2012 marks an absolute record low activity by value in the broader construction sector ex-civil engineering.
• In Q1 2012 Volume of all activity ex-Civil Engineering fell to 16.7 from 18.5 in Q4 2011, marking another record low for the series. Year on year, the index has fallen 13%, which represents the sharpest contraction in four consecutive quarters. Quarter on quarter the index is down 9.73%. Things are getting much worse, rather than less worse. Over the last six months, average index reading fell 5.38% compared to previous six months average and year on year last six months average is down 9.51%.
• Relative to peak, value of construction production ex-civil engineering now stands at just 16.45% of the peak levels and volume of activity is now at 15.70% of the peak levels, both showing record declines.

For Civil Engineering sub-sector - the very same trends are true, with one exception - the rate of declines in activity slowed, not accelerated, in Q1 2012. Alas, we are thus in the case of getting worse more slowly, which is, as I like pointing out, not the same as getting better.

Value of Residential Construction fell to 9.4 in Q1 2012 against 9.7 in Q4 2011. The index declined 1.4% y/y and is now down, on average 4.5% in the last six months compared to previous six months. Year on year, average activity in the last six months fell 18.03%. Now, keep in mind, Residential Construction is now running at 91.75% below its peak pre-crisis levels.

Volume of Residential Construction fell to 8.5 from 8.8 in Q4 2011, a decline of 15% y/y. Average activity for the last six months was down 4.95% on previous six months and down 15.61% on same period a year ago. Relative to peak, volume of residential construction is now down 91.76%.

Per chart above, Value of Non-Residential construction declined to 53.8 in Q1 2012 from 62.4 9n Q4 2011, marking annual decline rate of 12.4%. Average six months activity is now down 5.53% on previous sexi months period and is down 5.83% on the same period a year ago. Relative to peak, non-residential construction value is down 56.37%.

Volume of Non-Residential construction activity dropped to 47.8 from 56.6 in Q4 2011. Annual rate of decline in Q1 2012 of -12% comes on foot of an annual increase of 3.3% in Q4 2011. 6mos average through Q1 2012 is now 5.43% below the previous 6mo period and is 4.31% below same period a year ago.

Chart below illustrates annual changes.

So the very same trends shown by the PMIs are present in the actual data. Once again, where's all that pinned up demand for new offices and facilities, for retrofits of facilities and for fit-outs that were supposed to come with the 'robust jobs creation' by the MNCs?

15/6/2012: Irish Construction PMIs - no sign of that MNCs jobs creation, again

What is going on in Irish construction sector, folks? The latest statements from the Irish development authorities and the Government and its 'experts' would make you believe that MNCs are killing each other trying to rush into building new space to house those thousands of workers that are allegedly being hired by them. Of course, we know the latter is balderdash (see here) when it comes to date through 2011, but can it be true for trends since 2011? After all, the Government aims to create tens of thousands new jobs in 2012 in the MNCs-sectors.

Ok, here are two posts on latest construction sector activity. First one on Construction Sector PMIs (courtesy of the Ulster Bank) and the second one on CSO data.


Take a look at the latest (May 2012) Construction Sector PMIs:

Suppose there was a rush in activity in MNCs-sectors. That would translate in some uptick in construction activity in Commercial sector. Right? In May 2012 Commercial sector Construction PMI stood at 46.8, which is (1) signal of rather significant rate of contraction m/m, (2) marks the lowest reading in the sub-index since November 2011, and (3) is worse than shallower rate of contraction signaled by 48.4 reading in April.

In fact, May 2012 reading is below 3mo and 6mo MA readings. So the rate of decline has accelerated in May compared to 3mo average and 6 mo average.

As dodgy as the activity is across all Construction-related sub-categories, it is the Commercial sub-sector activity that is signaling worsening of the already poor trend.

So, where are those thousands of new jobs going to be housed? Per Ulster Bank (emphasis mine): "Those panellists that recorded a decline in overall construction activity during the month mainly linked this to falling new business. New orders at Irish constructors decreased for the fifth successive month. Where firms were able to secure new business, they reported that this was often dependent on prices being reduced."

Now, you might say that there can be 'expectations' of future activity that are not fully reflected in the above figures. Yep. "Irish construction firms remained optimistic that activity will be higher in 12 months’ time than current levels, with sentiment improving from that registered in April. That said, positive expectations largely reflected the fact that a rise in activity is likely given the low levels currently being recorded." So, yes, firms are still giddy (they've been 'optimistic' now for many months, in fact over a year), but they are not giddy about hordes of new orders arriving. Instead they are optimistic about the prospect of continued attrition wiping out more of their competitors or that they might pick some jobs as the derelict unfinished sites start crumbling down in earnest. Nice one.

14/5/2012: Irish Construction Sector PMIs for April 2012

The Irish Construction PMI published by the Ulster Bank posted another massive fall, declining to 45.4 in April, from 46.7 in March. This is the sharpest rate of decline in the sector since October 2011. 

Breakdown by sub-sector:

Which means that

1. Housing sector activity is now sharper than overall activity, for the first time in seven months and is sharpest since September 2011

1. Commercial sector activity is on shallower decrease path in April than in March, but nonetheless, there is no improvement, despite the claims by our development agencies and reports by some real estate houses that MNCs are literally falling over each other trying to build massive new facilities. 

11/4/2012: Irish Construction Sector PMI for March

Irish construction PMI for March 2012 (published by Ulster Bank) posted a 58th consecutive monthly contraction with a reading of 46.7 against 45.8 in February 2012. In other words, construction sector activity has now been below 50.0 reading every month since June 2007.

Commercial sector activity showed accelerating decline at 47.4 in march 2012 against 49.1 in February 2012. This puts to a test some of the assertions made in recent months by sector analysts and in the media that commercial construction activity is showing a rise on the foot of robust FDI investments.


Engineering sector activity - primarily driven by public projects - was showing decline at 37.0 in march, slower rate of decrease than consistent with 35.6 reading in February. Housing sector activity remained on a relatively constant rate of decline at 42.3 in March compared to 42.4 in February.


Desperate reports of some analysts have decided to focus "positive" attention on allegedly broadly unchnaged new orders sub'index and improved business sentiment. However, actual data release stated that (emphasis and commentary mine):

• New orders were broadly unchanged in March, having declined solidly in the preceding month (thus unchanged in March means unchanged from the losses sustained previously). Some firms indicated that small contracts had been secured during the month, but others indicated that a reluctance among clients to commit to projects had prevented a rise in new orders. (If this is a net positive, I should be probably joining the Russian Ballet)
• Business sentiment was at its highest since January 2007 in March and, as such, was the strongest since the current downturn in activity began (in June 2007). Exactly 46% of respondents  predict that activity will increase over the next 12 months, with signs of improving economic conditions and a forecast rise in new orders supporting optimism. (Alas, the Ulster Bank release fails to give us any data on business sentiment sub-index. In fact, this is the only indicator missing in the charts supplied by the Markit note).

What no report that I have seen so far mentions is that, per Ulster Bank-Markit note: Construction sector "workloads remained insufficient to generate a rise in employment in the sector during March. That said, staffing levels decreased at a rate that was much weaker than seen throughout much of the current downturn." So employment continues to drop. And profit margins are also continuing to fall: "The rate of input cost inflation accelerated for the third consecutive month in March, and was the fastest since April 2011. Higher prices for fuel and other oil-related products were reported by panellists."

On the foot of this information, and presumably with an aid of some tealeafs floating in a cuppa, one respectable analyst concluded (emphasis and commentary mine): unchanged new orders and unverifiable "spike" in business sentiment "...may tentatively signal that the Irish market is approaching stabilisation, albeit at a very depressed level." Ok, then, Bolshoi School is recruiting for Junior Infants... I am off for an audition.

15/3/2012: Irish Building & Construction Sector Q4 2011

About six months ago I was told by a 'person in the know' that there is huge construction boom about to happen in Ireland as multinationals are allegedly fighting over each other over suitable new office facilities. May be. Or may be not. I am not in the business of building stuff, so would have to wait for a credible flow of news and data to confirm such a shift in the trends. Today's CSO stats on activity in Construction and Building sector is not exactly pointing to a massive uptick.

Let's take a look.

First, data for construction & building ex-civil engineering:

• Value index remained flat at 20.9 in Q4 2011, same as in Q3 2011. Year on year index is down 8.3%. 6mo average is now 0.2% ahead of previous 6mos average and year on year, 6mo average is down 12%. No improvement here. 
• Value of construction and building ex-civil engineering is now down to 18.4% of the peak level.
• Volume index also remained falt at 18.8 in Q4 2011 and Q3 2011, while year on year Q4 2011 index is down 5.5 on Q4 2010. 6mo average for the most recent 6 months is up 0.5% and year on yer last six months activity is down 9.2%. No improvements here either.
• Volume of construction and building ex-civil engineering is now 18.0% of the peak.

Chart to illustrate:

As annual rates of change suggest - things are getting worse at a slower speed.

In terms of civil engineering output:

• There was a substantial jump in civil engineering output value in Q4 2011 - up 27.7% qoq although still down 11.8% yoy. Latest 6mos average is 10.8% ahead of previous 6mo average and down 16% year on year.
• There was also a measurable increase in volume of civil engineering activity up 27.8% qoq inQ4 2011, although still 9.1% down yoy. 6mo average through December 2011 is 11.1% ahead of preceding 6mos period and 13.3% below the same period in 2010.

So some improvements here in quarterly series and dramatic ones, but still down yoy:

Lastly, residential v non-residential construction activity:

• Value of residential construction activity declined to  9.7 in Q4 2011 from 9.9 in Q3 2011. Value of residential construction sector activity is now 91.0% below its peak and is 90% below 2005 levels. Yar on year value of activity is down 21.1%. 
• Volume of residential sector activity slipped marginally to 8.9 inQ4 2011 from 9.0 in Q3 2011. Year on year the index is down 15.2% and relative to peak it is down 91.5%. Volume of construction activity in the residential sector is now down 91% on 2005 levels.
• Abysmal does not even begin to describe these results and there is no improvement in year on year performance since Q4 2006 in value and since Q1 2006 in volume terms.
• Non-residential activity in value terms improved slightly from 62.7 in Q3 2011 to 63.6 inQ4 2011 - marking second consecutive quarter of improvements. Yoy activity in Q4 2011 was up 1.1% - first yearly rise since Q4 2008. Relative to peak value of non-residential construction activity is still down 48.3%.
• Non-residential construction volume index also improved, marking third quarter of gains in a row, rising from 56.6 in Q3 2011 to 57.8 in Q4 2011. Annual rate of increase is now 4% and this is the first such gain since Q3 2007.

So on the net, some positive moves in non-residential construction which still require continued confirmation to the upside in the next 1-2 quarters in order to call the market bottom and a year or so more of consistent rises to call the upswing trend. Negative newsflow for residential, although some moderation in the rate of decline.

21/12/2011: Irish Planning Permission Q3 2011

In Q3 2011, there were 2,512 planning permissions granted for dwelling units, compared with 4,641 units for the same period in 2010, a yoy decrease of 45.9 %.

However, overall, Q3 2011 number of new dwellings approved stood at 1,271, up 0.55% qoq and down 22% yoy. Relative to peak in Q2 2004, the number of new dwelling units approved declined 83.2% in Q3 2011.

Per CSO: 

• Planning Permissions were granted for 1,887 houses in the third quarter of 2011 and 2,817 in the third quarter of 2010, a decrease of 33.0%. 
• Planning permissions were granted for 625 apartment units, compared with 1,824 units for the same period in 2010, a decrease of 65.7%.
• Total floor area planned was 969 thousand square metres in the third quarter of 2011. Of this, 48.0% was for new dwellings, 29.7% for other new constructions and 22.3% for extensions. The total floor area planned decreased by 31.4% in comparison with the same quarter in 2010.
• Planning Permissions for new buildings for Agriculture rose to 194 this quarter. This compares to 132 permissions in the same quarter of 2010.

More detailed analysis of CSO data shows that total number of new permissions rose 4.76% qoq in Q3 2011 from 4,244 in Q2 2011 to 4,446. However, Q3 2011 total number of permissions was down 16% yoy and down 74.4% on the peak attained in Q3 2007.

Charts below illustrate: