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Fri April 23 2021

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Irish construction activity continues to grow

10 Aug 15 Activity in Ireland’s construction industry rose sharply in July, albeit at weaker pace than in June.

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There were signs of a slowdown in growth rates, but activity, new orders and employment all continued to increase sharply during the month and business sentiment picked up.

Meanwhile, input prices continued to rise, largely reflecting the weakness of the euro against sterling.

The Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – fell to 59.1 in July from 65.7 in June, its lowest reading in three months. That said, the index still signalled a substantial monthly increase in construction activity, and the twenty-third in as many months.

Simon Barry, chief economist Republic of Ireland at Ulster Bank, said: “The results of the latest Ulster Bank Construction PMI survey point to further robust increases in Irish construction activity in July. The overall PMI index did fall back a bit last month, but from what was an exceptionally strong reading in June and the July results signal that firms continue to experience rapid growth in activity. Mirroring the overall results, somewhat slower - but still solid - growth was recorded in both housing and commercial activity. The results for civil engineering were not as favourable, with activity here registering a decline in July, ending a three-month run of expansion.

“The July survey also reported further signs of healthy growth in the key areas of new orders and employment, though the pace of increase moderated slightly in these indices also. New business levels have been on the rise for over two years now – a pattern that is underpinning high levels of confidence within the sector. Sentiment among firms rose notably last month, with over two-thirds of respondents expecting activity levels to rise further in the coming year. On-going improvements in both the wider economy and the construction sector itself were cited as supports for the upbeat assessment of the 12-month outlook. More generally, the July figures point to an encouraging start to the second half of the year, with construction sector recovery momentum looking healthy in the early part of the third quarter.”

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New orders rose for the twenty-fifth successive month, with improving economic conditions and the securing of contracts costed earlier in the year reportedly behind the expansion.

Staffing levels rose markedly, extending the current sequence of job creation to 23 months.

Companies continued to increase their usage of subcontractors in July, leading to a further decline in their availability.

A rise in purchasing demand imparted capacity pressure on suppliers, with delivery times lengthening markedly in July and to a similar extent as that seen in June.

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