Latest figures from the Ulster Bank Construction Purchasing Managers’ Index (PMI) show that the Irish construction sector made a strong start to 2018, posting faster increases in activity, new orders and employment, as well as seeing confidence improve again.
Rising workloads led construction firms to increase their staffing levels again, the fifty-third consecutive month in which that has been the case. The rate of job creation was sharp and the fastest since last August.
Meanwhile, input costs rose to the greatest extent in 11 years. The Ulster Bank Construction PMI – a seasonally adjusted index designed to track changes in total construction activity – rose to 61.4 in January from 58.0 in December. Activity has now risen continuously since September 2013.
Simon Barry, chief economist Republic of Ireland at Ulster Bank, said: “The latest results of the Ulster Bank Construction PMI survey paint a very encouraging picture of early-year activity trends in Irish construction. The headline PMI picked up for the third month in a row, with a highly elevated reading of 61.4 representing an eight-month high. There was a particularly notable acceleration in commercial activity making it the fastest growing sector last month. However, the improvement was broadly-based, with the housing PMI also rising to an eight-month high, consistent with ongoing very rapid activity growth. in addition, there were further welcome signs of improvement in civil Engineering which logged a second consecutive month of expansion, with a 55.6 reading marking the best performance for that sub-sector in almost two years.
He added that other detail within the report confirms the positive signals from the headline indicator. “Notably, the new orders index picked up again leaving it in line with the robust average pace of increase recorded to date in the recovery,” he said. “And the strength of trends in current and prospective activity continues to underpin solid labour demand, with the employment index rising to a five-month high.”
For the second month running, activity rose across all three monitored categories of construction as civil engineering continued its recent recovery. Activity on civil engineering projects increased sharply in January. Steep expansions in activity were recorded again in the housing and commercial subsectors, with commercial posting the strongest growth at the start of 2018.
Business sentiment strengthened for the second consecutive month. Confidence reflected expected improvements in conditions both in the wider economy and construction industry itself, as well as the prospect of further increases in new contracts. More than 53% of panellists forecast a rise in activity over the coming year.