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Sun June 13 2021

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Growth in Irish construction activity slows

9 May 16 Ireland’s construction activity is still growing but the pace of expansion continues to slow.

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New orders and employment are also rising at slower rates, though business sentiment picked up to a 17-month high.

The Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – fell to 56.4 in April from 62.3 in March. Although the latest reading continued to signal marked growth of construction activity, the rate of expansion slowed for the second month running and was the weakest since last November.

Simon Barry, chief economist Republic of Ireland at Ulster Bank, said: “Irish construction activity continues to grow at a solid, albeit slower, pace according to the latest results of the Ulster Bank Construction PMI. The headline PMI index declined markedly for the second month in a row to leave it at 56.4 in April – its lowest level since last November. It was a similar story in the details beneath the headline figure, with slower rises in activity also recorded in each of the major sub-sectors of housing, commercial and civil engineering.

“However, these declines need to be seen in the context of the exceptional strength recorded earlier in the year which saw the main PMI as well as the housing sub-index establish new record highs in February. So while this slippage in momentum bears careful monitoring in the months ahead, it is important to note that these results are still very much consistent with a sector comfortably in expansion territory. Indeed, construction firms remain distinctly upbeat about the sector’s prospects.

Sentiment in April rose to its second-highest level in the survey’s history as more than two-thirds of respondents anticipate further gains in activity in the coming twelve months.” 

Housing activity continued to increase at the sharpest pace, closely followed by work on commercial projects. Civil engineering remained the worst-performing category in April as activity rose only modestly and at the slowest pace in 2016 so far.

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Where growth of total activity was recorded, this was linked by panellists to the signing of new contracts.

New orders increased for the 34th month in a row but, in line with the trend in activity, the rate of expansion eased.

A slower rise in employment was also registered, but the rate of job creation remained marked. Panellists reported that the signing of new contracts had led them to take on extra staff.

Irish construction firms reduced their usage of subcontractors for the first time in 14 months during April. Despite this, the availability of sub-contractors deteriorated at a sharp and accelerated pace, with the latest decline the most marked since November 2014.

Purchasing activity at Irish construction firms rose sharply, with respondents attributing this to higher new orders. That said, the rate of growth eased to the slowest in the year-to-date. Higher demand for inputs was reportedly a factor behind a further lengthening of suppliers’ delivery times.

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