Activity marks a four-month high – PMI
July saw a further sharp monthly expansion of business activity at Irish construction firms, on the back of an accelerated increase in new orders. Rising workloads encouraged companies to take on extra staff and increase their purchasing activity.
Meanwhile, business sentiment dropped from the previous month, but remained strongly positive. The Ulster Bank Construction Purchasing Managers’ Index® (PMI®) – a seasonally adjusted index designed to track changes in total construction activity – 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.
Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, noted that:
“The latest results of the Ulster Bank Construction PMI survey show another sharp increase in Irish construction, with the pace of expansion accelerating to a four-month high in July. Underpinning the further uplift in activity last month was a further significant increase in new business, with the new orders index also rising to its highest level since March.
The robust advances in activity and new business once again resulted in higher employment levels, with the rate of job creation picking up to a five-month high in July.
The strongest-performing sector last month was Commercial, where growth picked up to its fastest since February, while Housing activity also continued to rise at a sharp pace, albeit slightly slower than registered in June. Civil Engineering activity continues to expand, but at a pace that remains some way slower than the other two main sub-sectors.
“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. 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.”