Irish construction slows unexpectedly as input costs rise 

Almost a quarter of purchasing managers surveyed said their input costs had picked up in July.

Activity in housing and in other parts of the Irish construction industry unexpectedly slowed in July, as inflation costs showed some signs of edging higher again, a major survey has found.

However, the BNP Paribas Real Estate Ireland Construction Index also reported that employment levels rose in July from June, indicating that builders may be preparing for better times ahead.

The overall purchasing managers’ index (PMI) that measures activity month-by-month showed a reading of 45.6, where any measure below 50 means that activity has slowed from the previous month.

The index, which is compiled from a series of questions put to purchasing managers working in the industry, is one of a series conducted around the world.

The three components of the industry all contracted: Housing showed a reading of 45.9; office, retail, industrial, and other commercial activity posted a reading of 45.3, and civil engineering had a reading of 39.4.

'Mixed bag'

“The July PMI was a mixed bag,” said BNP Paribas director and head of research John McCartney, in a commentary, referring to contrasting findings, including a slowdown in housing activity even as recent official figures showed a pick-up in housing starts.

“In this context, and given the continued pick-up in housing starts, the back-slide into contraction in July was unexpected.”

The survey also showed that building cost inflation, in contrast to official wholesale prices, had grown again in the latest month, after having cooled significantly in June.

Almost a quarter of the managers surveyed said their input costs had picked up in July.

“On a positive note, construction firms reported increased employment for the seventh successive month, and for the 10th time in the last 12 months,” said Mr McCartney.

“This demonstrates that building firms are still able to recruit staff despite the tight labour market, and suggests an underlying confidence about the future.

“This confidence was replicated in the future expectations indicator which remains positive, and which shows a slight increase in sector optimism between June and July.”