Construction activity eased to 11-month low in September

Business activity in North falls as Brexit remains a concern, Ulster Bank’s PMI shows

Construction activity eased in September in the Republic.

Construction activity eased in September in the Republic.

 

Activity in the Republic’s construction sector eased to an 11-month low in September but was still expanding, according to Ulster Bank’s latest construction purchasing managers’ index (PMI).

Meanwhile, in Northern Ireland, business activity, new orders and job creation all fell back last month as Brexit worries continued to dominate the economic landscape, according to Ulster Bank’s latest Northern Ireland PMI.

The bank’s seasonally adjusted gauge for the Republic sank to 56.2 last month, down from 58.3 in August, but remained significantly above the 50 mark that separates expansion from contraction.

Activity has risen continuously on a monthly basis since September 2013. Commercial activity rose sharply, and at a faster pace than in August. The rate of growth in activity on housing projects remained marked, but slowed for the second month running.

Civil engineering activity, meanwhile, decreased modestly, the first fall in three months.

Accelerated pace

New orders increased at a sharp and accelerated pace in September amid reports of improving customer demand, the survey suggested. Construction firms responded to higher new orders by taking on extra staff, the 61st successive month in which a rise in employment has been registered.

Commenting on the survey, Simon Barry, Ulster Bank’s chief economist, said: “The construction sector continued to experience solid, though slightly slower, growth in September. However, at 56.2, the latest reading remains well above the 50 break-even level and indicates that firms continue to report robust gains in activity.

“The commercial PMI picked up slightly from what was already an elevated reading in August . . . the housing PMI also continues to point to robust activity growth in the residential sector,” he said.

The sector is benefiting from a pick-up in housebuilding in urban areas, including Dublin, where demand for homes outstrips supply, and an increase in commercial building, which recovered more quickly than the residential sector.

Northern Ireland recorded its slowest rate of private sector growth in 23 months during September although export orders remained strong, boosted primarily by new business wins from customers in the Republic, the latest Ulster Bank Northern Ireland PMI report shows.

Construction sector

Richard Ramsey, Ulster Bank’s chief economist in Northern Ireland, said: “Northern Ireland firms are now the least optimistic in the UK, and their most pessimistic since this indicator began 19 months ago, with Brexit a major concern for respondents,” he said.

“Notably, the construction sector, which had been experiencing something of a relative purple patch, is seeing expectations fall. Firms in this sector now expect their workloads to be lower in 12 months’ time than they are currently, with major public sector infrastructure projects being put on hold.

“However, all sectors are still in growth mode, for now at least, and manufacturing is outperforming relative to its long-term average.”

Businesses blamed the weakness of sterling and higher costs for both fuel and staff as the key factors behind the latest increase in input prices, while passing on rising costs to customers was the main reason for higher prices charged.