Building Growth at six month high
The latest edition of Ulster Bank’s construction purchasing managers’ index (PMI), formally published this morning, shows a reading of 63.3 points for May; up from 57.2 for April. The index, which is generally viewed as being the leading barometer of health for the building sector here, has now been in growth mode for 21 months and May’s reading represented the sharpest monthly increase since last November. Any reading above the neutral 50-point mark indicates a sector in growth mode.
“The detail behind the headline paints a similarly optimistic picture. For the second successive month, a marked acceleration in activity was recorded in two out of the three major sub-sectors; namely housing and commercial, whild civil engineering activity also edged higher, albeit at a much less rapid pace,” said Simon Barry, Ulster Bank’s chief economist for the Republic.
The new business orders sub-index rose to 60.4 in May, its highest level to date in 2015. The positive knock-on effect of that movement was that more firms upped their staff levels during the month to deal with greater demand. Job creation amongst respondent firms reached a four-month high in May, according to the survey results.
“Moreover,” said Mr Barry, “sentiment about the sector’s prospects over the coming 12 months also rose in May and remains at very elevated levels.
“Irish construction firms continue to envisage further activity gains on the back of a strengthening in the broader economy.
May’s sentiment levels were not only an increase on the previous month, but qualified as among the strongest seen in the survey’s history.
Some respondents to the latest survey suggested that more tenders were available to bid for.
The strong numbers for May follow a marked acceleration for the sector in April, when the reading shot up from 52.9 points to 57.9. The movement from February to March was only 0.9 points in comparison.
Meanwhile, last month’s rise in purchasing activity was the 15th in as many months.
The rate of growth in input buying has quickened in each of the past three months, with the latest increase the fastest since last December.
The PMI’s findings on the health of the construction sector are likely to be supported on Wednesday by CSO figures detailing first quarter building output activity.
