Building sector ends Q3 on a high

The Irish construction sector ended the third quarter in robust health, with building firms noting a six-month high in new business order growth in September.

“Irish construction activity continues to grow at a very solid pace,” said Simon Barry, Ulster Bank’s chief economist for the Republic.

“The sector’s recovery continues to be underpined by a greater availability of new work, as new orders increased for the 39th month in a row, and at the fastest pace since March.

“The health of the trends in new business offers much encouragement about the sector’s near-term prospects, both in absolute terms and relative to other areas of the economy.”

Mr Barry was speaking as the latest edition of Ulster Bank’s construction purchasing managers’ index (PMI) — widely seen as the chief health barometer for the sector, here — showed a reading of 58.7 points for September, up by 0.3 points from a healthy, but slowing, growth picture in August.

Anything above a neutral 50 point reading illustrates a sector in growth mode.

All three sub-sectors — housing, commercial, and civil engineering — showed growth, last month, and company sentiment remained elevated.

Mr Barry suggested that the latest rise in new orders signals an acceleration in new business growth in the last quarter.

“This is a pattern which leaves construction sector momentum looking stronger than both manufacturing and services as we enter the final quarter of the year, with recent PMIs from those sectors suggesting that Brexit impacts are weighing on activity trends in the more internationally exposed areas of the economy.”

Employment also continued to rise last month, but, following August’s six-month high in hiring levels, September’s job creation rate represented the weakest in a year and a half.

“The slowdown partly reflected the non-replacement of leavers, but also a greater use of sub-contractors,” the PMI said.

Sub-contractor usage increased at the fastest pace in three months, the index said.

The latest strong PMI reading means the Irish construction industry has been in unchecked growth mode for three years.