Signs of a slowdown in growth rates of Irish construction activity during July were reported, according to the latest monthly PMI survey.
Nevertheless, 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, noted that: “The July survey...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.”
Neither the number of panel firms or the response rate is disclosed suggesting that the sample is small.
Strong rise in commercial activity: Slower rises in activity were seen on commercial and residential projects during July, with the commercial sector continuing to record the stronger rate of growth. Meanwhile, civil engineering activity decreased marginally, ending a three-month sequence of expansion.
"Staffing levels rose markedly, extending the current sequence of job creation to 23 months. Panellists reported having taken on extra staff in response to higher new business. Companies continued to increase their usage of subcontractors in July, leading to a further decline in their availability. Moreover, the availability of subcontractors decreased at the fastest pace since November 2014," according to the survey.