Construction BUSINESS

The Ulster bank Purchasing Managers’ Index (PMI) for December, released on Monday, showed that activity in the construction sector constinued to rise until the end of 2016. The report gave December a 58.9 in December, down from 59.8 in November. For the PMI index, any reading above 50 represent a growth over the previous month.

Rates of job creation and growth of purchasing activity remained “substantial” while the rate of new orders grew. Most firms firms were reported to be “strongly optimistic” that activity would increase further in 2017.  However, the report warned that the rate of input cost inflation accelerated sharply to the strongest since March 2007.

Construction activity has now risen in each of the past 40 months, with the most recent expansion attributed to higher new work volumes.

“The December results of the Ulster Bank Construction PMI survey indicate that Irish construction firms continued to experience sharp increases in activity last month,” Chief Economist Republic of Ireland at Ulster Bank Simon Barry said. “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.”

However, civil engineering activity reportedly decreased for the second month in a row and at the “fastest pace since April 2014”.

New orders have risen for the last three-and-a-half years, with December seeing a faster expansion than November. Rising workloads led construction firms to hire more stadd again at the end of the year. The rate of job was in line with the nine-month high seen in November.

Firms  were recorded as increasing 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. Panellists reported higher prices for raw materials and manufactured goods. A further deterioration in the performance of suppliers to the construction sector was recorded, with the latest lengthening of lead times the greatest in ten months.

The full report can be read here.