Construction increased at a slightly faster pace in September but the rates of growth in new orders and employment both eased, according to the latest Ulster Bank purchasing managers’ index (PMI), writes Pádraig Hoare.
The index, which measures changes in total construction activity, rose slightly to 56.5 in September from August’s 29-month low of 55.1. Any reading over 50 represents an expansion in activity.
Activity has now increased in each of the past 49 months, with a sharp expansion signalled at the end of the third quarter, the bank said. Chief economist for the Republic at Ulster Bank, Simon Barry said: “The latest results show that construction activity re-accelerated in September, halting a three-month sequence of deceleration from the exceptionally rapid growth recorded in May.”
He said the sectoral breakdown reveals a mixed picture.
“Growth in commercial activity picked up sharply, leaving it as the strongest performing category last month. Housing activity continued to grow strongly and at a pace similar to that recorded on average during the 2004-06 pre-crisis period, albeit that the pace of expansion moderated from August.”
Civil Engineering continued to underperform, recording a fourth consecutive monthly decline in activity, Mr Barry added, though the pace of contraction eased markedly last month.
Meanwhile, business organisation Guaranteed Irish called for a reduction in Vat on houses to 9%, the expansion of incentive schemes, and an overhaul of apprenticeships to stimulate the construction industry.
It called for the reform of the Development Contribution Rebate Scheme to open it up for developments with fewer than 50 houses and making it easier for smaller companies to access finance to build.
It called for a review of the apprenticeships scheme to offer shorter-term apprenticeships, and to make apprenticeships more attractive for both school-leavers and employers.
It said the help-to-buy scheme for first-time buyers and the home renovation incentive has “provided a boon for the construction industry”.
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