Republic of Ireland: slowdown in construction activity in February 2014

The Ulster Bank Construction Purchasing Managers’ Index^® (PMI^®) has been announced at a seasonally adjusted rate of 52.0 for February 2015. This indicates a continued slowdown in the pace of growth for the construction industry in the Republic of Ireland, following a PMI^® of 57.1 in January 2015. February represented the fourth month in a row of declining growth rates. Although commercial activity increased in February, housing activity stagnated and activity in the civil engineering sector contracted for the first time since September 2014.

Both new order and job creation growth rates slowed in February, with the latter at its slowest since June 2014. Sub-contractor availability fell, leading to a rise in sub-contractor rates.

The rate of input cost inflation was at its fastest since July 2008, which some have attributed to the fall of the euro against UK sterling and the US dollar.

“The February results of the Ulster Bank Construction PMI survey point to a notable loss of momentum in Irish construction activity last month. The headline PMI index remained above the expansion level of 50 in February, and thus continues to point to rising activity levels – as it has done for the past year and a half. However, the key feature of the February results is another sharp drop in the index, which indicates that the pace of growth eased significantly last month. This follows the large decline also recorded in the January survey, and takes the growth in activity to its weakest in eighteen months,” said Simon Barry, Chief Economist Republic of Ireland at Ulster Bank.

“The detail behind the headline reading paints a similarly disappointing picture. Weaker activity patterns were reported across all three main subsectors. Housing activity stagnated last month, a marked turnaround from the record rates of expansion recorded as recently as September of last year. It could be that some of this weakness is linked to higher levels of uncertainty surrounding the housing market outlook related to the recently introduced Central Bank mortgage lending regulations. However, the weakness emerging in the past couple of months has extended beyond housing. Activity has also softened materially in both commercial and civil engineering, which should not be as directly affected by the Central Bank measures, thus pointing to more broadly-based weakness. Overall, while Irish construction remains in recovery mode, it is clear that the sector’s recovery dynamic has weakened considerably in the early part of this year,” added Barry.

Adapted from press release by Louise Fordham

Read the article online at: https://www.worldcement.com/europe-cis/09032015/construction-activity-growth-slows-in-ireland-in-february-2014-479/