The latest edition of Ulster Bank’s construction Purchasing Managers’ Index (PMI) — seen as the main barometer of health for the country’s building sector — shows a reading of 52.9 points for March, up from 52 points in February. Any score/rating above the 50 point mark signals a sector in growth mode.
However, the survey, published this morning, warned that while activity grew faster last month than in the previous one, the rate of expansion in the sector remains “much weaker” than seen during 2014.
Nonetheless, Simon Barry — Ulster Bank’s chief economist for the Republic — remains upbeat on the sector.
“Overall, following the sharp weakening in the pace of construction activity recorded in January and February, the modest improvement in the March PMI is a welcome sign that the sector’s growth rate steadied at the end of the first quarter,” he said.
“Nevertheless, it remains the case that the rate of expansion, in March, was a good deal weaker than seen last year, consistent with a notable loss of momentum in the sector’s recovery so far this year, relative to the very strong growth recorded in 2014,” Mr Barry added.
While new business orders have now increased every month since July 2013, and March’s rise was steadier than previously, the latest edition of the index shows an easing in the rate of job creation. That said, however, March did see the new business orders lead firms to take on extra staff, which resulted in a 19th successive monthly increase in employment in the sector. But, job creation was at its weakest rate since December 2013, all the same.
The PMI showed slight improvements in both housing and commercial construction activity, with the rise in new orders expected to underpin activity levels in the coming months.
“Another point of interest, from the March results, was a second consecutive monthly acceleration in the rate of input cost inflation to its fastest pace in eight years,” said Mr Barry.
“A number of respondents indicated that recent euro weakness, particularly against sterling, had led to a rise in the cost of imports,” he added.
Outside of housing and commercial, where the sharper increase was noted, civil engineering activity fell for the second successive month, in March, and at a solid pace. Sentiment, amongst firms, picked up, however, and is currently at one of the highest levels seen in the history of the survey.