Ulster Bank reports positive outlook for Irish construction sector

The Ulster Bank Construction Purchasing Managers’ Index® (PMI® ) – a seasonally adjusted index designed to track changes in total construction activity – posted 58.9 in December. This is a slight decrease from the reading of 59.8 in November, but still indicates a significant monthly increase in activity.

Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, noted that: “The December results of the Ulster Bank Construction PMI survey indicate that Irish construction firms continued to experience sharp increases in activity last month. The headline PMI was recorded at 58.9 in December, down slightly from November’s 59.8 but still signalling robust expansion of activity. Both the residential and commercial sub-sectors remain particular sources of strength for survey respondents, with activity in both categories continuing to rise at rapid rates, albeit slightly less rapid than was the case in November. Civil engineering remains an area of weakness, however, with activity here decreasing for the second month running. “Overall, the December survey results round off another strong year of recovery for Irish construction firms, with the PMI consistently pointing to ongoing healthy expansion throughout 2016. Moreover, momentum behind the sector’s recovery continues to look encouragingly solid, with a marked pick up in New Orders in December indicating that activity trends look set to remain positive in early 2017. Furthermore, firms themselves remain strongly optimistic about the coming year with almost two thirds of respondents expecting further growth in activity in the coming 12 months. While a notable late-year pick up in input prices points to increased challenges on the costs front, positive sentiment about the year ahead is being underpinned by signs of improving conditions in both the construction sector itself and the wider Irish economy.”

Record sharp increases in activity were recorded for both the housing and commercial construction categories, with the rate of annual growth marginally quicker in the latter. Civil engineering activity, in contrast, decreased for the second month running and at the fastest pace since April 2014.

Over the past three and a half years, new orders have risen considerably. December saw a strong monthly expansion that was faster than that recorded in November.

Staffing levels at construction firms were again increased at the end of the year, due to rising workloads. The rate of job creation continued to be substantial and was broadly in line with the nine-month high observed in November.

Firms also increased their purchasing activity sharply, extending the current sequence of growth to 34 months.

The rate of input cost inflation accelerated sharply during December and was the fastest since March 2007, with panellists reporting higher prices for raw materials and manufactured goods.

The performance of suppliers to the construction sector was reported to have deteriorated further, with the latest lengthening of lead times the greatest in ten months.

Business sentiment improved at the end of the year and was strongly positives, with improvements in the construction sector and wider Irish economy set to help lead to a growth of activity during 2017.

Read the article online at: https://www.worldcement.com/europe-cis/16012017/ulster-bank-reports-positive-outlook-for-irish-construction-sector/