Irish construction activity up slightly last month

Construction activity growth quickened in March with new orders and business sentiment both increasing, according to the latest Ulster Bank Construction Purchasing Managers' Index.

Growth in activity came after having slowed for four successive months.

Meanwhile, a weaker euro contributed to the strongest increase in input prices since March 2007 with the index rising slightly to 52.9 last month, compared to 52.0 in February.

Ulster Bank said activity on both housing and commercial projects rose at the end of the first quarter, and at marginally faster rates. However, civil engineering activity decreased for the second successive month, and at a solid pace.

"Overall, following the sharp weakening in the pace of construction activity recorded in January and February, the modest improvement in the March PMI is a welcome sign that the sector's growth rate steadied at the end of the first quarter," said Simon Barry, chief economist at Ulster Bank.

“Nevertheless, it remains the case that the rate of expansion in March was a good deal weaker than that seen last year, consistent with a notable loss of momentum in the sector’s recovery so far this year relative to the very strong growth recorded in 2014,” he added.

New business increased in March, as has been the case in each month since July 2013. Increased business led a number of construction firms to increase headcount, resulting in a nineteenth successive monthly rise in employment in March. The rate of job creation eased to the weakest since December 2013 however, linked to slower growth of new business in the first quarter of the year.

The rate of input cost inflation picked up for the second month in a row in March and was the sharpest in eight years.

Ulster Bank said construction firms continued to increase their purchasing activity in March, extending the current sequence of expansion to 13 months. Panellists reported having raised their input buying in line with improving client demand. However, pressure on capacity at suppliers led to a lengthening of delivery times, as has been the case in each month since July 2011. That said, the latest deterioration was the weakest in 2015 so far.

Business sentiment picked up to the strongest in four months and was one of the highest in the series history. Panellists predict improvements in wider economic conditions and the construction market will help lead activity to rise, Ulster Bank said.