Growth in construction continued in October, but the pace of expansion slowed to its lowest rate in more than three years, the latest figures show.
Ulster Bank's construction purchasing managers' index (PMI) shows that activity in commercial development, house-building and public projects increased again last month.
October was the 62nd consecutive month that the index showed growth, meaning that the Republic’s construction industry has been expanding for five years after pulling out of a deep recession sparked by the 2008 financial crisis.
The index, which follows the sector’s performance every month, reached 52.9 in October, indicating that the industry grew during the month.
Ulster’s PMI takes 50 as its benchmark. Any reading above that figure means that the industry expanded on the previous month, while any result below that shows that it shrank.
October’s reading was below the 56.2 recorded in September, which shows that while activity increased it did so at a slower rate last month than in the previous one. The rate of expansion was the slowest since March 2015, according to Ulster Bank.
Simon Barry, the lender's chief economist for the Republic of Ireland, noted that the index had fallen for three months in a row, although the industry remained "comfortably" in expansion territory.
“It is not wholly surprising to see some cooling in the pace of construction growth given the extremely rapid expansion recorded in the summer and the similar signs of slowdown from elsewhere in the Irish private sector of late,” he said. “But the headline results from the October construction survey are certainly on the disappointing side.”
Mr Barry said the bank believed at least some of the fall was due to the usual ebb and flow of survey results.
The figures show that commercial building, such as offices and factories, was the strongest performer, reaching 53.9 in October. House construction followed at 53.6.
Civil engineering, which includes large often State-funded projects, fell to 45.3, indicating a considerable decline in this activity. This was the sharpest fall in this sector in 14 months.However, Mr Barry indicated that a likely step-up in Exchequer spending on infrastructure would be one of a number of factors underpinning the industry’s future growth. Measures to tackle the Republic’s ongoing housing shortage were another.
“So while the headline PMI results for October point to a disappointing start to the final quarter of the year for construction activity, we would be surprised if the results in the coming months don’t show signs of renewed improvement.”