Irish Economy 2014: The construction PMI
(purchasing managers' index) maintained its recent run of improvement at the
start of 2014 as further new business growth led to another strong rise in
activity. Meanwhile, firms increased their employment at a faster pace. Business
sentiment was only slightly weaker than December’s record high as firms forecast
further growth of activity over the coming year. The sample of firms polled is
likely to be small as it's not disclosed in contrast with other PMI survey
reports - - so boomtime has not yet returned!
The Ulster Bank Construction PMI - - a seasonally adjusted index designed
to track changes in total construction activity - - posted 56.4 in January, down
from 58.3 in December but still signalling a sharp monthly increase in
construction activity. Activity has now risen in each of the past five months.
Where growth of activity was recorded, panellists reported that this was in line
with further increases in new orders.
Commenting on the survey, Simon Barry,
chief economist Republic of Ireland at Ulster Bank,
noted that: “Early 2014 has seen a further expansion in Irish construction,
according to the latest results of the Ulster Bank Construction PMI. The
headline index did pull back a little from its end-2013 levels in January but
the PMI remains comfortably in expansion territory, as it recorded its fifth
consecutive above-50 reading. The more positive trends in the sector continue to
be underpinned by solid increases in activity levels in the home-building
and commercial arenas, though respondents reported further declines in civil
“The improvement in activity levels, in tandem with another strong gain in new
orders, produced a fifth consecutive month of expanding employment, with the
pace of hiring picking up in January to its second-fastest in nearly seven
years. Moreover, optimism surrounding the prospects for the year ahead remains
high among Irish construction firms. Sentiment levels have stayed close to the
survey record seen in December as some two-thirds of firms anticipate further
growth over the coming year reflecting a belief that the nascent construction
recovery will gain traction in the months ahead.”
Strong growth in housing and commercial activity:
The rise in total activity again reflected strong growth in the residential and
commercial sectors, although in each case the rate of expansion eased from the
end of last year. Civil engineering activity continued to fall sharply, with the
rate of contraction quickening to the fastest since June 2013.
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