Commercial building up but housebuilding slips, survey suggests

Many businesses in building sector seem to expect activity will pick up again later in year

Hiring increased in the building sector in January, extending the period of construction jobs growth to six and a half years

Despite the housing crisis, Irish residential building activity contracted last month, according to the latest industry survey.

The Ulster Bank Purchasing Managers Index recorded a “particularly strong” performance in January for commercial building activity. There was, however, a “disappointing” contraction in housebuilding, although the bank suggests that it expects activity to pick up again later in the year.

Commercial building activity in January surged ahead at an 11-month high, the index suggests. Ulster Bank said it was a “marked” increase and growth in this segment of the construction industry is running above the 20-year average of the survey. This comes even as property investors last week seemed to call the top of the commercial property market by fleeing funds invested in the sector.

"[But] following a bounce in December... respondents reported an early-year contraction in residential activity," said Simon Barry, the bank's chief economist for the republic.

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Leading indicators

“However, with leading indicators such as the housing commencements data continuing to point to further upside for housing output, we would be surprised if the housing PMI doesn’t show some improvement in the months ahead,” he said.

Responses to the survey seemed to suggest that many businesses in the building sector expect activity to pick up later in the year, however. Hiring increased in January, extending the period of construction jobs growth to 6½ years. Respondents highlighted “a good pipeline” of work.

Mark Paul

Mark Paul

Mark Paul is London Correspondent for The Irish Times