April sees an increase in sentiment
“The pace of growth in the Irish construction activity continued to ease from February’s record in April, with new orders and employment also rising at slower rates. That said, the sector remained comfortably in expansion territory during the month and business sentiment picked up to a 17-month high.”
These are the conclusions of the Ulster Bank Construction Purchasing Managers’ Index® (PMI®) – a seasonally adjusted index designed to track changes in total construction activity, which fell to 56.4 in April from 62.3 in March.
Although the latest reading continued to signal marked growth of construction activity, the rate of expansion slowed for the second month running and was the weakest since last November.
Growing at a solid pace
Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, noted: “Irish construction activity continues to grow at a solid, albeit slower, pace according to the latest results of the Ulster Bank Construction PMI.
“The headline PMI index declined markedly for the second month in a row to leave it at 56.4 in April – its lowest level since last November.
“It was a similar story in the details beneath the headline figure, with slower rises in activity also recorded in each of the major sub-sectors of Housing, Commercial and Civil Engineering.
“However, these declines need to be seen in the context of the exceptional strength recorded earlier in the year which saw the main PMI as well as the Housing sub-index establish new record highs in February.
“So while this slippage in momentum bears careful monitoring in the months ahead, it is important to note that these results are still very much consistent with a sector comfortably in expansion territory.
“Indeed, construction firms remain distinctly upbeat about the sector’s prospects. Sentiment in April rose to its second-highest level in the survey’s history as more than two-thirds of respondents anticipate further gains in activity in the coming twelve months.”
Housing category leads expansion in April
Slower rises in activity were recorded across the three categories of construction covered by the survey.
Housing activity continued to increase at the sharpest pace, closely followed by work on commercial projects.
Civil engineering remained the worst-performing category in April as activity rose only modestly and at the slowest pace in 2016 so far.
New orders rise sharply again
Where growth of total activity was recorded, this was linked by panelists to the signing of new contracts. New orders increased for the thirty-fourth month in a row but, in line with the trend in activity, the rate of expansion eased.
Rate of job creation eases
A slower rise in employment was also registered, but the rate of job creation remained marked.
Business sentiment improved in April, with more than two-thirds of respondents predicting a rise in activity over the coming year.
Moreover, optimism was the second-highest in the series history, behind November 2014’s record.
Forecasts of improving economic conditions and higher new business supported positive sentiment, while some panelists suggested that an expectation of improved housing supply would help lead to growth of activity.