Results emerge from monthly Ulster Bank PMI surveys of activity
Growth slows in construction in the South while exports from the North are on the rise
Houses under construction in Trim, Co Meath. The rate of growth in construction activity slowed in August. Photograph: Frank Millar
The rate of growth in construction activity in the Republic slowed in August to its slowest rate in almost 2½ years, according to the latest purchasing managers index (PMI) from Ulster Bank.
A sharp spike in housebuilding was maintained over the month, according to the PMI. But weaker growth in commercial building, and a decline in activity in civil engineering, meant the industry’s overall rate of growth is at its lowest level since March 2015.
August was the third month in succession to record a slowdown in growth, according to the research.
The PMI survey also found that, despite slower commercial growth, employment in the sector continues to expand, while input costs such as materials also rose sharply in August.
“While the overall story remains one of continuing construction sector expansion, the latest PMI readings suggest that momentum behind the recovery has slipped a little – a trend that bears watching in the months ahead,” said Simon Barry, the bank’s chief economist in the Republic.
Meanwhile, firms in the North had to recruit more people last month to cope with a sharp rise in new export orders, particularly from clients in the South, thanks to sterling’s weakness against the euro, the latest PMI for Northern Ireland found.
The level of new export contracts hit a three-month high in August as the flailing pound delivered yet another boost for northern firms.
The survey shows the North’s private sector registered faster rises in output and new orders during August than the UK average for the first time during 2017.
The service sector reported the fastest rise in new orders while the manufacturing and retail sectors also reported brisk business.
But an increase in input prices forced some local firms to pass on costs which also resulted in a sharp rise in output prices – at a much faster rate than the UK average.
Richard Ramsey, Ulster Bank’s chief economist for Northern Ireland, said the latest PMI report shows that the North was benefitting from the “robust recovery” in the euro zone.
“Northern Ireland firms are taking advantage of having one of the fastest growing economies in Europe – the Republic of Ireland – on its doorstep. Throw a weak currency into the mix and the conditions are ideal for local firms selling into the Republic of Ireland /euro zone market,” he said.