Ulster Bank PMI for August strong at 58.4

Ulster Bank PMI

– Three years of consecutive monthly growth

– Commercial Construction Activity Up ↑

– Housing Construction Activity Up ↑

– Civil Engineering Activity Down ↓

The Irish construction sector continued to expand, with month on month growth recorded for the past three years, according to the latest Ulster Bank Construction Purchasing Managers’ Index (PMI).

Construction activity remained strong in August, with increases in purchasing activity and employment, according to the PMI. The Index tracks changes in total construction activity, and it posted at 58.4 in August, above the 50.0 no-change mark, but below the 61.0 figure recorded for July.

Simon Barry, Chief Economist Republic of Ireland at Ulster Bank stated: “The latest results of the Ulster Bank Construction PMI survey indicate that there was a further solid rise in activity at Irish construction firms in August.  The pace of growth eased modestly relative to July, but the August reading of the headline PMI index – at 58.4 – still remains very comfortably in expansion territory.”

Three consecutive years of expansion

He continued: “Indeed, August marked the 36th consecutive month of expansion, highlighting that a sustained uplift has been underway for three full years now at Irish construction firms.  Commercial activity was again the best-performing sub-sector, despite some easing in growth compared to July.”

The Index highlights that commercial activity remains the fastest growing sub-sector, while housing activity also expanded strongly during the month. Civil engineering activity has decreased however during August, ending an 11-month sequence of growth.

New orders rose sharply

In August, new orders rose sharply, with the rate of expansion quickening to the fastest since March with some companies seeing signs of improving client demand. These increasing workloads led firms to raise purchasing activity during the month, extending the current period of expansion to two and a half years.

But the rate of input cost inflation accelerated in August as companies mentioned higher prices for a range of raw materials. They also reported some inflationary pressures had increased following the UK’s referendum on EU membership.

Brexit Impact on Construction

The August PMI survey included a question about construction views on the impact of the Brexit referendum result. Almost 60 percent of those surveyed said that they expected no impact on their activity from the result in the coming year, while similar proportions expected activity increases or reductions as a result of the referendum.

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