The Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – stood at 54.6 in January, down from 56.3 in December, signalling a weaker expansion of Irish activity. Moreover, the rate of growth eased to a three-month low. That said, overall Irish construction activity has increased on a monthly basis since September 2013.
Ulster Bank chief economist Republic of Ireland Simon Barry said: “The headline PMI eased to a three-month low last month, but at 54.6 it remains well above the 50 breakeven level and indicates that firms continue to report solid gains in activity. Housing was the fastest-growing category in January, with this important sub-sector recording ongoing solid expansion, albeit at a somewhat less rapid pace than earlier in the recovery.”
Completions data published last week showed that new home construction rose by 25% last year, with the full-year total of about 18,100 units completed representing a nine-year high. Early-year trends in the housing PMI – as well as the signals from other indicators - are consistent with further improvements in housing supply in the coming year.
“Elsewhere in the survey, new orders continued to rise sharply with firms reporting an encouraging improvement in client demand at the beginning of the year,” added Barry. In turn, the ongoing expansion in actual and prospective activity is continuing to underpin employment in construction. Firms have continued to add to staffing levels in response to the buoyancy of demand, though the pace of hiring has moderated in recent months from the exceptionally rapid growth reported last summer.”
The housing sub-category recorded the fastest rise in activity of the three monitored sub-sectors at the start of 2019. Commercial activity also increased solidly over the month, while civil engineering activity declined again, albeit at a reduced pace.
New business has now increased in each of the past 67 months, with the rate of growth quickening from December.
In contrast to the quicker rise in new business, employment growth in the Irish construction industry eased to a four-month low during January. Despite this, the pace of expansion was solid amid reports from firms that extra staff had been hired in order to keep up with customer demand. Payrolls have now increased on a monthly basis since September 2013.
January marked the fifty-ninth consecutive month of rising input buying among Irish construction companies. The pace at which purchasing activity increased was solid but slowed from December.