Ulster Bank Construction PMI shows increased industry activity

May’s increase was the 21st successive month where expansion was recorded.

The Ulster Bank Construction Purchasing Managers’ Index (PMI) has been released today with good news for the industry in Ireland.

Designed to track changes in total construction activity, this seasonally adjusted index has shown that the rate of total activity growth for the Irish construction sector has increased for the third month in succession.

From 57.2 in April, the index posted a rating of 63.3 in May which means that the pace of growth is at the same level of pace experienced in the final quarter of 2014.

These figures are further positive news for the industry, bearing in mind that 50.0 is the number that represents no change.

The latest readings show housing activity increased from April’s 55.8 to 62.7 in May, commercial activity is up from 59.3 to 64.2 and civil engineering has risen from 51.0 to 51.9.

Largely a consequence of a rise in new orders which in turn has boosted the employment and purchasing activity of firms, May’s PMI figure means that activity in the Irish construction sector has expanded for the 21st month in succession.

The increase in new business was the 23rd consecutive rise and May’s was the fastest of the year.

As a result, employment has gone up considerably in May, with job creation at its highest figure for four months, while the purchasing activity increase is the 15th consecutive monthly occurrence – the pace of which is at its fastest rate since the end of last year.

Another piece of encouraging news to come from these figures is the use of subcontractors by Irish construction firms, which increased sharply, resulting in a decrease in available subcontractors because they are in such demand at the moment.

Moving forward, the companies in the Irish construction sector are looking forward to the rest of the year with increased confidence and expect further increases in activity throughout the rest of 2015.

Simon Berry, Chief Economist Republic of Ireland at Ulster Bank, believes the results paint a positive picture for the industry.

He said: “The detail behind the headline paints a similarly optimistic picture. For the second successive month a marked acceleration in activity was recorded in two out of the three major sub-sectors, namely housing and commercial, while civil engineering activity also edged higher, albeit at a much less rapid pace.

“Respondents also reported a further pick-up in new orders which rose to 60.4 – its highest level so far in 2015. This resulted in firms adding to staffing levels in response to greater client demand with one in four panellists increasing their headcount last month.

“Moreover, sentiment about the sector’s prospects over the coming 12 months also rose in May and remains at very elevated levels.

“Irish construction firms continue to envisage further activity gains on the back of a strengthening in the broader economy.”

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