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Irish construction employment grows

13 Jun 16 The rate of job creation in Ireland’s construction sector ticked up slightly in May although the growth in new orders eased for the third month running.

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Activity and new orders continued to rise sharply, despite the further signs of a slowdown in growth.

While construction firms raised employment at their units, businesses reduced their usage of sub-contractors for the second month in a row. That said, the rate of contraction was only fractional. Meanwhile, the availability of sub-contractors continued to fall sharply.

The Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – posted 55.9 in May, down slightly from 56.4 in April but still signalling a marked monthly increase in total construction activity.

Activity has now risen in each of the past 33 months, although the rate of expansion eased to the slowest since November last year. Panellists mentioned higher new orders and work on housing projects as having supported growth of activity.

Simon Barry, chief economist Republic of Ireland at Ulster Bank, said: “The latest Ulster Bank Construction PMI signalled ongoing growth of construction activity in Ireland during May, with the headline index remaining well above the 50.0 no-change mark at 55.9. Although the rate of expansion eased slightly, it was still marked and above the pre-downturn average. A slowdown from the record rate of expansion seen in February was probably inevitable, but it would be reassuring to see some stabilisation in the growth rate in coming months.

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“Looking beyond the headline figure, weaker expansions were also seen with regards to housing activity and new orders, while business confidence dipped. On the other hand, there were positive signs from a faster rise in commercial activity, while construction firms were in a position to up their rate of job creation slightly. To sum up, the overall picture is one of solid improvements, albeit with less spectacular rates of growth than were seen in the first quarter of the year.”

Housing activity continued to rise sharply in May, albeit at a slightly slower pace than in the previous month. The fastest increase of the three monitored categories was on commercial projects, where the rate of expansion accelerated. Civil engineering activity rose only slightly over the month, with the latest increase the slowest in the current nine-month sequence of growth.

The rate of input cost inflation accelerated again and was faster than the series average. Panellists reported higher prices for raw materials including metals, as well as increased fuel costs. Meanwhile, the rates charged by sub-contractors also rose at a faster pace.

Business confidence dropped sharply in the latest survey period and was the lowest in more than two-and-a-half years. That said, sentiment remained strongly positive, with over half of all respondents forecasting growth of activity over the coming year.

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