The Ulster Bank Construction Purchasing Managers’ Index (PMI) figure for March was 55.9. down from 60.5 in February. Index readings above 50 signal an increase in activity on the previous month and reading below 50 signal a decrease.
Ulster Bank chief economist Republic of Ireland Simon Barry said: “A decline in the headline PMI index, from 60.5 to 55.9, indicates that the pace of expansion did ease back in March. However, this follows a very strong February performance and the still-robust level of the PMI signals that Irish construction continues to expand at a solid rate. Mirroring the pattern of the headline PMI, the sectoral sub-indices also painted a picture of moderating growth in March, though the housing and commercial indices both remain at levels consistent with ongoing solid activity growth.” This was particularly so in the case of housing, which was the fastest-growing category for a 3rd month in a row, he said.
“Encouragingly, respondents reported a marked pick-up in the pace of job creation, with the employment index rising to a very elevated reading of 59.6 in March, matching a nine-month high,” he said. “The demand for construction workers continues to be underpinned by new business which continued to rise solidly in March, though at a slightly slower pace than the very rapid rate recorded in February.”
Firms remain optimistic about the coming year, said Barry, with 43% of respondents anticipating higher output levels over the year ahead, with expectations of stronger customer demand cited as an important source of support. “However, sentiment about the sector’s prospects did moderate slightly in March,” he added. “This was amid reports from respondents that Brexit risks and uncertainties are weighing on perceptions of the construction outlook, albeit that the March PMI survey results indicate that construction continues to outperform both manufacturing and services where Brexit risks are more pronounced.”
For the third month in a row, the housing sub-category recorded the fastest rise in activity of the three monitored sub-sectors in March. Commercial activity also increased solidly over the month, but growth eased notably from February. Meanwhile, civil engineering activity declined for the seventh consecutive month and at the fastest pace since November 2018.
New order growth was sharp in March, despite easing slightly from February. New business inflows among Irish construction firms have now increased in each of the past 69 months.
Employment growth was the fastest since July 2018. The rate of job creation was steep amid reports that extra staff had been hired in order to keep up with customer demand.
March marked the 61st consecutive month of rising input buying among Irish construction companies. The pace at which purchasing activity increased was marked but eased slightly from February.