Stormy weather hampers housebuilding in February

Stormy weather led to a decline in the rate of housebuilding in the Republic last month, according to Ulster Bank.

The bank’s latest construction purchasing managers’ index (PMI), which tracks activity in the sector, showed that while overall construction activity rose in February, it was driven by work on big commercial projects.

The sub-index for housing, however, decreased for a second month in a row.

Ulster Bank's chief economist for the Republic, Simon Barry, said the decline was only marginal and "activity would have returned to expansion had it not been for the adverse weather last month".

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Just over 21,000 homes were built last year and experts believe the sector will deliver about 23,000 this year but nothing near the 35,000 needed to meet demand.

Ulster Bank’s latest PMI showed that while overall construction activity rose for the third consecutive month in February, the pace of expansion was slowed by poor weather.

The February index fell to 50.6 last month, down slightly on the previous month, but still above to the 50 mark, which delineates expansion from contraction. The February expansion was the third in as many months, but the softest in this sequence, the bank said. Where activity increased, panellists linked this to rises in new orders amid improving demand. On the other hand, stormy weather during February limited the pace of expansion, it said.

“The sub-sector detail shows that commercial activity continues to lead the expansion, with the February figures registering a fourth month of positive growth, albeit at a slower pace than in January,” Mr Barry said.

“Meanwhile, the results on residential activity remained slightly disappointing, with the housing PMI signalling a second consecutive monthly decline in activity,” he said.

Mr Barry said new business across the sector continued to rise at a healthy, though slower rate in February as reduced Brexit-related uncertainty was again cited as a support for new orders. He also noted that firms remain optimistic about the coming year.

“While sentiment eased back a little last month from January’s one-year high, firms indicated that they were confident that new business would improve over the coming year, with almost 40 per cent of respondents anticipating higher output levels in the coming 12 months,” he said.

However, he cautioned that the global spread of the coronavirus represents a new important source of downside risk to the Irish economy “as we look ahead, albeit that the mainly domestic-facing construction sector is perhaps less directly exposed to adverse virus impacts than the more heavily trade- and tourism-dependent areas of the economy”.