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The rate of job creation also picked up during the month and businesses were optimistic about the outlook, predicted further improvements during 2016.
The Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – rose to 58.6 in December from 55.5 in November. Activity has now increased in each of the past 28 months, with the latest expansion the strongest since July.
Simon Barry, chief economist Republic of Ireland at Ulster Bank, said: “The Irish construction sector closed out 2015 on a firm footing according to the latest results of the Ulster Bank Construction PMI. The pace of activity growth picked up sharply last month as the headline PMI index rose to a five-month high of 58.6 in December, up from 55.5 in November. Overall activity trends were buoyed by a strong acceleration in both commercial and housing activity, with the pickup in the residential arena a particularly welcome development given concerns about the housing supply shortfall. Growth in civil engineering continues to lag some way behind the other sectors though it did record a fourth consecutive month of expansion last month.
“Overall, the December survey results indicate that Irish construction firms are reporting solid momentum as a second full year of recovery drew to a close. The New Orders index continues to show vibrant expansion, with increasing enquiries for new business pointing to a healthy near-term pipeline of activity. And firms certainly remain optimistic about prospects for the year ahead, with sentiment remaining close to record levels despite easing slightly from November.”
Constructors raised their purchasing activity for the 22nd successive month, and at a solid pace that was only slightly slower than seen in November. Suppliers’ delivery times lengthened only fractionally in December. The current sequence of lengthening lead times now stretches to four-and-a-half years. Some respondents indicated that supplier performance had improved as a result of increased stock holdings.
The rate of cost inflation remained sharp, and was little-changed from November. A number of respondents reported that suppliers had raised their prices during the month.
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