The Irish construction sector marked three years of expansion in a row in August, according to the latest Ulster Bank construction Purchasing Managers’ Index.
The monthly measure of activity and sentiment shows the pace of growth slowed slightly in the month compared to July, but Ulster Bank said the sector still remains “comfortably in expansion territory”, RTE reported.
The Ulster Bank Construction PMI posted a reading of 58.4 in August, remaining well above the 50 no-change mark, but down from the reading of 61 in July.
Today’s index shows that commercial activity remains the fastest growing sub-sector, while housing activity also expanded strongly during the month. But civil engineering activity decreased during August, ending an 11-month sequence of growth.
In August, new orders rose sharply, with the rate of expansion quickening to the fastest since March with some companies seeing signs of improving client demand.
The rate of job creation also picked up last month as higher activity requirements encouraged companies to take on extra staff.
These increasing workloads in turn led firms to raise purchasing activity during the month, extending the current period of expansion to two and a half years.
But the rate of input cost inflation accelerated in August as companies mentioned higher prices for a range of raw materials. They also reported some inflationary pressures had increased following the UK’s referendum on EU membership.
Mixed Reactions to Brexit
The August PMI survey featured a special question regarding construction companies’ views about the possible impact of the recent Brexit referendum in the UK.
Almost 60% of respondents said they expected no impact from the referendum result on their activity over the coming year, while broadly similar proportions of companies expected activity to be boosted or reduced by the result.
“Indeed, firms remain strongly optimistic about prospects for construction activity over the coming twelve months,” Ulster Bank’s chief economist Simon Barry noted.
“Sentiment rose strongly in August to stand at one of the highest readings in the survey’s 16-year history, underpinned by robust trends in new business (where growth picked up to a five-month high) and expectations that the wider economy will remain healthy.
“Thus, while downside risks to the broader economy from Brexit and other sources will continue to bear close watching in the months ahead, it is clear that Irish construction firms remain bullish on the outlook for their own sector,” Barry added.
