Construction growth at three-year low

The latest monthly construction purchasing managers’ index (PMI) from Ulster Bank — widely seen as one of the major health barometers for the building industry — showed a reading of 54.5 points for October.

Any reading over the neutral 50 points indicates a sector in growth mode and October ranked as the 50th straight month in which construction activity grew.

However, October’s reading was down from one of 56.5 points in September and ranked as the slowest rate of monthly growth since March 2015.

Ulster Bank’s chief economist in the Republic Simon Barry says the sector continues to show healthy rates of expansion. October’s easing could be viewed as a cooling in momentum following what was a very strong first half of growth this year, he said.

“Last month’s reading remains comfortably in expansion territory,” said Mr Barry.

However, he also warned latest growth trends need to be closely monitored over the next few months.

“A further easing, last month, has left the pace of growth [in residential and commercial activity] some way below the very rapid rates recorded over the summer months. While the overall story very much remains one of continuing construction sector improvement, both in absolute terms and relative to other European countries, the evidence of some recent cooling in momentum bears close watching in the months ahead,” he said.

However, despite October’s slower growth, construction firms remain upbeat about their prospects. Respondents said they remained confident of output increases over the coming year; largely based on a belief that new order levels will pick up again. However, business sentiment dipped to an eight-month low in October.

Meanwhile, while hiring levels continued to grow, that growth eased for the second consecutive month.

Civil engineering activity continued to underperform last month, registering a fifth consecutive month in activity decline.