Construction sector recovery continues with sentiment high

Recovery continues to be centred on housing and commercial activity, construction PMI shows

Ulster Bank’s headquarters in Dublin: the bank’s construction purchasing managers’ index, which is designed to track changes in activity posted 60.2 in May. Photograph: Alan Betson/Irish Times

Ulster Bank’s headquarters in Dublin: the bank’s construction purchasing managers’ index, which is designed to track changes in activity posted 60.2 in May. Photograph: Alan Betson/Irish Times

Mon, Jun 9, 2014, 08:35

The recovery in the construction sector continued in May, with activity having now risen in each of the past nine months.

The Ulster Bank Construction Purchasing Managers’ Index (PMI), which is designed to track changes in activity, posted 60.2 in May. This is down from the previous month’s reading of 63.5 but still points to a sharp increase in total construction activity.

Ulster Bank’s chief economist Simon Barry said that although rates of expansion in activity, new orders and employment all eased from the highs seen in April, they remained strong and companies were again optimistic regarding growth over the coming year.

“The latest Ulster Bank Construction PMI signals ongoing strong monthly growth of activity, with May’s headline reading only slightly below April’s near-record high. The recovery continued to be centred on housing and commercial activity, with both areas posting substantial rises again. However, there was some welcome news with regards to civil engineering activity, which decreased at the slowest pace since the end of 2007,” he said.

“The rate of growth in new orders also remained sharp despite easing from the previous month. Companies reported success in securing contracts for work both in Ireland and abroad and were confident that these trends would continue over the coming year, leading to further growth of activity during the next 12 months. This optimism encouraged firms to take on extra staff and raise their purchasing activity, in both cases at marked rates.

A marked acceleration in the rate of input cost inflation was recorded last month as suppliers took advantage of improved demand for inputs to raise their charges, the index found.

It also shows the commercial sector was the best-performing sector again in May, while a strong expansion in housing activity also recorded during the month.

New business continued to rise, albeit at a weaker pace than seen in April, while there was also an increase in purchasing and employment in May.

Business sentiment also remained high as companies continue to be optimistic about increased activity in the construction sector over the coming year.