Ireland is not the only country experiencing a decline in the construction industry. The latest figures released by the Office of National Statistics in the UK suggest that in the first Quarter of 2011 construction output fell by 4%. This is somewhat expected given the typical seasonal deviations in the construction data. And the figure is less worrying when noting that output in Q1 2011 is 3.4% higher than output was in Q1 2010. Suggesting that there may be signs of a tentative recovery in output in the sector. However, it is still substantially below the levels observed at the height of the industry in 2007.
Figure 1 shows how, over the last few years, construction output has declined dramatically but in recent quarters is displaying something of a recovery. This is dramatically at odds with what is occurring in Ireland where construction output has been in a continual downward spiral. It can be noted that while in 2009 output floundered throughout the year, following a continual decline in 2008, from Q1 2010 improvements were observable in the output of the industry. This peaked in Q2 and Q3, as would be expected given the highly seasonal nature of this industry. The decline in Q4 2010 and Q1 2011 are likely the result of this typical seasonal variation and when figures are released in three months time for Q2 2011, provided that there is no major shock to the industry, it would be expected that the output would rise again. It will be interesting to observe however whether the output rises above that experienced in 2010 or whether, year on year, the seasonal peaks will be lower.
Justin Doran is a Lecturer in Economics, in the Department of Economics, University College Cork, Ireland.