Ulster Bank have today released their latest Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity.
It rose to 61.0 in July from 59.7 in June, signalling a further substantial monthly increase in activity and one that was the fastest in four months. Total construction activity has now risen in each of the past 35 months.
While each of the three monitored sub-categories registered growth of activity, rates of expansion varied.
The strongest rise was again on commercial projects where growth quickened to the sharpest since February. Housing activity continued to rise at a considerable pace, albeit one that was slightly slower than in June. The weakest expansion in July was for civil engineering activity where the rise was only slight.
According to panellists, the increase in total activity was mainly due to higher new orders. New business expanded at a sharp and accelerated rate during the month, extending the current sequence of growth which began in July 2013.
Furthermore, rising activity requirements encouraged construction firms to take on extra staff and expand their purchasing activity during the month.
Employment rose for the thirty-fifth successive month, and at the fastest pace since February. Meanwhile, the rate of growth in input buying also picked up, and to a four-month high.
Business sentiment remained strongly positive in July, despite having eased sharply from June’s near-record high. Exactly 58% of respondents predicted growth of activity over the next 12 months, with optimism reflecting expectations of increasing new business and improving economic conditions. On the other hand, 9% of panellists expected a fall in activity.
Chief Economist Republic of Ireland at Ulster Bank, Simon Barry commented, "The July survey results offer the first glimpse into Irish construction trends following the UK referendum. The continuation of strong trends in overall activity and new business provide important encouragement that the sector’s recovery is maintaining solid momentum at present. It is important not to be complacent on this front, however."
He added, "Uncertainty remains high about the extent of the possible adverse impact on the Irish economy from Brexit-related risks, even if the primarily domestic-focussed construction sector isn’t in the line of fire to the same extent as the more export-oriented manufacturing sector where recent trends have clearly deteriorated as Brexit effects have begun to take hold."