Housing and commercial activity grow – PMI
Activity in the construction sector rose sharply last month, according to the latest Purchasing Managers Index from Ulster Bank. Ulster Bank’s Construction PMI for February stood at 57.9, up from 55.7 in January and well above the 50 mark that separates growth from contraction. Housing activity saw the strongest pace of growth in February, with commercial activity also rising.
Civil engineering activity is continuing to shrink, with the latest fall marking the fourth consecutive month of decline. Ulster Bank said that in line with the trend in total activity, new business rose at a faster pace in February. Construction companies said that improving economic conditions had helped them to secure new orders.
Ulster Bank also said the rate of job creation remained considerable last month and was the third-fastest in the survey’s history. It said that companies responded to increased workloads by taking on extra staff, while there were also reports that employment had been raised in order to support business growth.
The rate of input cost inflation eased markedly in February, but remained sharp amid reports of higher costs for raw materials including metals. Although dipping from January, optimism among construction firms remained elevated in February as more than 54% of respondents predicted activity to rise over the coming year. Positive sentiment reflected improvements in the Irish economy and forecasts of further new order growth, Ulster Bank said.
Ulster Bank’s chief economist Simon Barry noted the “very encouraging” acceleration in residential activity which took the Housing PMI back to levels last seen in November and in the process keeping housing as the strongest performing activity category last month. He added that last week’s National Accounts figures from the CSO showed that construction was not only the fastest growing broad sector of the economy in 2016, but recorded its fastest year of output growth in over 20 years.
