Weakest rise in construction output since March 2015

Updated / Monday, 12 Nov 2018 10:06

The Ulster Bank Construction Purchasing Managers Index fell to 52.9 in October from 56.2 in September

The level of construction activity in Ireland rose moderately during October, with the pace of expansion the slowest since March 2015. 

The latest Ulster Bank Construction Purchasing Managers Index, which tracks changes in total construction activity, fell to 52.9 in October down from 56.2 in September.

Ulster Bank noted that while growth of new business also eased, the rate of job creation rose to a three-month high.

Despite the October slowdown of activity growth, total activity in the construction industry has now risen in each of the past 62 months. Where activity increased, panellists linked this to improving customer demand.

The index covers three sub-categories - residential, civil engineering and commercial construction activity.

Residential and commercial construction activity increased in October, although at slower rates than September. As was the case in September, commercial was the best-performing sector. 

But civil engineering construction activity declined in October, and at the fastest pace in 14 months.

"The October results reveal a notable loss of momentum in the growth rate of construction activity last month as the headline PMI slipped to 52.9 in October from 56.2 in September," commented Ulster Bank's senior economist Simon Barry.

He said that while that still leaves the sector comfortably in expansion territory, the PMI has now fallen for three months in a row, with the October reading marking the slowest pace of growth in over three and a half years.

The economist said it was not too 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 also said the sector's overall outlook continues to be underpinned by the housing supply shortfall and by the marked step-up in the growth of Exchequer capital spending. 

"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," Simon Barry added.