Construction activity in Republic rises but North’s economy in trouble

Construction activity in the Republic picked up for the first time in four months in August, a traditionally quiet month for the industry, according to a new report. However, in Northern Ireland the private sector “has entered or is entering recession”, according to Ulster Bank.

In the Republic the Ulster Bank construction purchasing managers index (PMI) reading for August came to 53.7 in August, up from 51.4 per cent in July. A level above 50 indicates the sector is expanding.

“Overall, following the sharp weakening in the pace of construction activity recorded over the previous three months, the pick-up in the August PMI is an encouraging sign that construction growth regained some momentum as the sector completed its sixth year of recovery,” said Simon Barry, chief economist for Ulster Bank in the Republic. “However, there are also reasons to maintain a somewhat cautious view about the sector’s near-term prospects.”

The improvement in August reflected better performance across the three main sub-sectors, with the index of housing activity rising to 58.4 per cent from 55.9 per cent. Commercial activity also continued to grow solidly, rising marginally to 55.1 per cent.

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Civil engineering remains an area of weakness, however, with the index reading for the sub-sector at 42.5 per cent, a twelfth consecutive monthly fall in activity. Still, it marked an increase from 40.5 in July.

Sharp falls

In the North, meanwhile, the private sector “has entered or is entering recession”, according to Ulster Bank’s latest Northern Ireland PMI.

The survey flags further declines in the North’s private sector during August, with sharp falls particularly evident in output and new orders.

All four key sectors reported declines in business activity last month in Northern Ireland, with “uncertainty surrounding Brexit” one of the key factors for the weaknesses in the economy.

Companies reported that new business from abroad declined at a “substantial pace” during August, and highlighted that customers in the Republic and other parts of Europe were “wary of committing to new projects”.

Richard Ramsey, chief economist Northern Ireland at Ulster Bank, said one of the most worrying elements from the latest survey was the pace of deterioration in the construction and manufacturing sectors.