Ulster Bank Construction PMI shows industry performed well in July

Increase in construction activity reported for 23rd consecutive month.

The Irish construction sector continued to perform well in July, despite growth in activity at a slower rate than June.

This comes from the Ulster Bank Construction Purchasing Managers’ Index (PMI), which is seasonally adjusted and tracks changes in total construction activity.

From its reading of 65.7 in June, the latest PMI has fallen to 59.1 – its lowest for three months.

The readings for housing activity, commercial activity and civil engineering activity are all slightly down, with housing at 57.3 from 64.9, commercial now 60.5 rather than 66.4, and civil at 49.1, down from its June reading of 52.8.

However, these readings are well above the 50.0 level which signifies no growth, and an increase in construction activity has been reported for the 23^rd month in succession.

In addition to an increase in activity, new orders and employment continued to rise in July, with the commercial sector continuing to record a strong rate of growth.

New order growth remained sharp, with orders increasing for a 25^th consecutive month. The reason for this is the fact that economic conditions are improving, while contracts secured earlier in the year have also helped to push the expansion.

Job creation has continued to rise and the reports suggest that extra staff members have been taken on as a direct result of higher new business.

Subcontractors remain in demand, with reports showing that companies increased their usage over the month of July.

Looking forward, the slight slowdown has done nothing to dampen expectations or confidence. An increase in production activity has been predicted over the next year due to the encouraging signs in both the construction industry and the wider economy.

The confidence is such that July was among the highest recorded optimism since the survey began in June 2000.

Simon Barry is the Chief Economist Republic of Ireland at Ulster Bank, and he was encouraged by the results.

He said: “The results of the latest Ulster Bank Construction PMI survey point to further robust increases in Irish construction activity in July. The overall PMI index did fall back a bit last month, but from what was an exceptionally strong reading in June, and the July results signal that firms continue to experience rapid growth in activity.

“The July survey also reported further signs of healthy growth in the key areas of new orders and employment, though the pace of increase moderated slightly in these indices also.

“New business levels have been on the rise for over two years now – a pattern that is underpinning high levels of confidence within the sector.

“Sentiment among firms rose notably last month, with over two thirds of respondents expecting activity levels to rise further in the coming year.

“Ongoing improvements in both the wider economy and the construction sector itself were cited as supports for the upbeat assessment of the 12-month outlook.

“More generally, the July figures point to an encouraging start to the second half of the year, with construction sector recovery looking healthy in the early part of the third quarter.”

The post Ulster Bank Construction PMI shows industry performed well in July appeared first on UK Construction Online.