Outlook is good for Ireland Construction Sector in 2018

Expansion in Irish construction hits five-month high

The rate of growth in November increased sharply from the previous month. New orders and employment also rose at stronger rates, related to improving economic conditions, stronger client confidence and efforts to expand activity.

The Ulster Bank Construction Purchasing Managers’ Index® (PMI) – a seasonally adjusted index designed to track changes in total construction activity – rose to 56.7 in November, up from 54.5 in October. The sharp increase extended the current sequence of expansion to 51 months.

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Simon Barry, chief Economist Republic of Ireland at Ulster Bank, said: “Growth in Irish construction activity re-accelerated in November, according to the latest results of the Ulster Bank Construction PMI survey. The rate of overall expansion picked-up from October’s multi-month low as the headline index rose from 54.5 in October to 56.7 in November, in the process reaching a five-month high. The improvement reflected better performance across the three main subsectors. A welcome increase in housing activity saw it record the sharpest increase in activity, thus remaining the strongest performing category last month. Commercial activity also continued to grow strongly, with the commercial PMI rising to 55.6 in November from 54.7 in October. Civil engineering remains an area of weakness, however, with respondents reporting a sixth consecutive monthly fall in activity, albeit at a reduced pace in November.”

Survey respondents mentioned that improving economic conditions continue to underpin expansion in both client demand and construction staffing levels, evident in a pick-up in the new orders and employment indices in November. “Sentiment about future activity prospects again edged lower in November, in the process falling to its lowest level since August 2013,” he added. “However, this is best seen as a modest retreat from exceptionally elevated levels as confidence levels remain solidly optimistic, with around half of all firms expecting activity to increase over the coming year.” 

Suppliers’ delivery times lengthened again as higher demand for inputs imparted pressure on vendors. That said, the deterioration in supplier performance was the weakest in 14 months.

Input costs continued to rise sharply, with higher prices for raw materials reported by panellists. Insulation was mentioned as costing more by a number of respondents.

Although Irish construction firms generally remained strongly confident regarding the 12-month outlook for activity, sentiment dipped again in November and was the lowest since August 2013.


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