The Ulster Bank Construction Purchasing Managers’ Index (PMI) rose to 55.5 in November, up from 52.9, signalling a strong expansion of Irish construction activity. Overall construction activity has now increased in each of the past 63 months, though October’s figure had been the lowest for more than three and a half years.
Ulster Bank chief economist Republic of Ireland Simon Barry said that the lastest result show a halt in a three-month sequence of deceleration from the exceptionally rapid growth recorded in the summer. “There was a sharp acceleration in housing activity making it the fastest growing sector last month,” he said. “But the improvement also reflected better performance in commercial activity, with the Commercial PMI rising to 57.5 in November from 53.9 in October. Civil engineering remains an area of weakness, however, with respondents reporting a third consecutive monthly decline in activity.”
Barry added that respondents also reported a marked pick-up in new business flows, with the new orders index rising to a very elevated reading - and five-month high - of 59.1 in November. “In turn, strong activity and new orders patterns continue to underpin robust demand for construction workers, though the pace of job creation eased slightly in November,” he said. “Sentiment about future activity prospects again edged lower in November, in the process falling to its lowest level since August 2013. However, this is best seen as a retreat from exceptionally elevated readings.”
Confidence levels remain solidly optimistic - at readings higher than seen on average at the peak of the last cycle in 2004-2006 - with nearly 45% of all firms expecting activity to increase over the coming year.”
Panellists attributed the faster pace of growth in new business to an overall increase in construction work and previously delayed projects starting up.
Employment in the Irish construction sector increased during November. That said, the rate of growth softened from October as some panellists said that recent delays in projects dampened overall job creation. Nonetheless, staffing levels have increased in each of the past 63 months.
In line with the trend for activity, input buying increased at a faster pace during November. The rate of growth was solid and quicker than in October. Purchasing activity among Irish construction firms has now increased for 57 successive months.
Input price inflation eased to the slowest in two years during November. The pace of increase remained elevated, however, amid reports of metal price increases and reduced availability of construction materials.