Construction activity falls at sharpest rate since June 2013 – survey

Brexit jitters drive commercial wobble but residential sector still expanding

Construction activity in Ireland fell at the sharpest rate since June 2013, according to an economic indicator produced by Ulster Bank.

The Ulster Bank PMI survey recorded a second consecutive monthly decline in activity. But, despite a report last week pointing to contraction in the Dublin residential market, the PMI survey says the sector continues to expand nationally, albeit at a slower rate.

The October residential reading was 51.3, down form 52.9 in September. Any reading above 50 indicates expansion.

Still, the index points to a clear loss of momentum in the construction industry generally. Commercial activity was responsible for the significant contraction in the index to 46.2 in October. Civil engineering activity also declined though this is the 14th consecutive month of weakness in this area. The October contractions were at a sharper pace than in September.


In line with the fall of activity, new orders witnessed the first fall since June 2013 with panellists citing ongoing uncertainty around Brexit.

"Anecdotes from the survey highlight that concerns about Brexit impacts continue to weigh on activity and sentiment regarding the sector's prospects for the coming year, said Ulster Bank chief economist for the Republic, Simon Barry. "In this context, the recent easing of concerns regarding Brexit crash out risk may offer some support for construction confidence and activity in the months ahead."

There were some positive features in the survey. Irish construction businesses added to their headcounts in October though the rate of job creation was seen as “marginal” and matched the almost six-year low recorded in September.

Purchasing activity among the panellists did rise in the month, again only marginally, and this too was linked to Brexit. Evidence suggested the rise in input purchases were to mitigate any supply disruptions the UK's exit from the European Union may cause.

Despite the uncertainty, optimism among Irish construction business picked up from September to the highest in three months. Just under a third of panellists expect activity to increase over the coming year.

Peter Hamilton

Peter Hamilton

Peter Hamilton is a contributor to The Irish Times specialising in business