Irish construction activity rose at a sharp and accelerated pace in May as new business expanded. This is according to the latest Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – it rose to 63.6 in May from 61.3 in April.
The reading signalled a substantial monthly increase in construction activity and the fastest since February 2016. Activity has now risen in each of the past 45 months. The latest expansion was linked to improving market conditions and higher new orders, with some panellists highlighting particular strength in housing.
Activity on housing projects rose at the fastest pace of the three monitored categories as the rate of growth surged to a 15-month high. Commercial activity also increased substantially during May, with the latest rise the fastest since July 2016. Civil engineering activity expanded for the second month running. The rate of growth picked up from the previous month, but remained modest.
New orders increased at one of the sharpest rates since the survey began in June 2000 as the pace of growth accelerated in May. New business has now risen on a monthly basis for almost four years.
The survey also shows that increased workloads led construction firms to raise their staffing levels, with more than one-quarter of respondents taking on extra staff. The rate of job creation was broadly in line with that seen in the previous month.
Meanwhile, the rate of input cost inflation quickened to a four-month high. Panellists reported higher raw material prices, with insulation mentioned in particular. Business sentiment remained strong, with companies predicting that higher new orders will result in further growth of construction activity over the coming year. Close to 55% of respondents forecast a rise in activity, with just 3% expecting a fall.
Commenting on the survey, Chief Economist Republic of Ireland at Ulster Bank, Simon Barry said, “The latest results of the Ulster Bank Construction PMI survey show another sharp increase in Irish construction activity, with the pace of expansion accelerating for the fourth month running. The headline PMI index rose to 63.6 in May from 61.3 in April, in the process reaching a fifteen-month high last month and signalling very robust expansion of activity.”