NEW ORDER GROWTH HITS THREE-MONTH HIGH IN NOVEMBER
The Ulster Bank Construction Purchasing Managers’ Index® (PMI®) – a seasonally adjusted index designed to track changes in total construction activity – posted 56.3 in November, down marginally from 56.9 in October but still indicative of a sharp monthly increase in total activity. The latest rise was the seventh in as many months. Where activity expanded, respondents generally attributed this to improving demand. Index readings above 50 signal an increase in activity on the previous month and readings below 50 signal a decrease.
Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, noted that:
“The recent Quarterly National Accounts from the Central Statistics Office indicated that construction was one of the fastest-growing sectors of the Irish economy in the third quarter of this year. The latest results of the Ulster Bank Construction PMI survey highlight that construction firms have continued to experience strong growth through the middle of the fourth quarter. The headline PMI eased slightly in November, but at 56.3 remains at elevated levels consistent with a strong pace of activity expansion, albeit one which has decelerated from the exceptional, post-lockdown snap-back growth registered earlier in the year. The pace of growth moderated somewhat from a very rapid pace in Commercial activity, while Housing and Civil Engineering both registered improvement last month to leave all three sub-sectors in expansion territory.
“The overall sector’s ongoing recovery momentum was again evident in very healthy readings in Employment and New Orders, both of which recorded accelerating growth in November which resulted in a 3-month high in each case. Growth in new business was partly linked to opportunities across the housing, healthcare and renewable energy areas. However, the November results again make clear that the sector continues to face highly testing supply-chain challenges linked to a variety of factors which continue to result in delivery delays and marked input cost pressures, including the pandemic, Brexit, higher global and domestic prices for energy and other materials and rising freight charges. And yet there was just a hint that the intensity of supply-chain disruptions may be easing a little as input price inflation and the pace of lengthening of supplier lead times eased to the weakest in six and seven months respectively.”
Broad-based expansion in activity
For the first time in four months, all three monitored categories of construction posted increases in activity as civil engineering returned to growth. In fact, civil engineering posted the fastest expansion of the three categories in November. Nonetheless, rates of growth in housing and commercial activity remained marked.
Denise Maguire Editor of Irish Construction Industry Magazine & Plan Magazine