Construction growth tapers slightly in March but is still strong

The rate of construction growth eased in March, but activity is still expanding “sharply”, according to an index released by Ulster Bank.

The bank’s monthly Purchasing Managers Index fell back from February, which “signalled a softer expansion of Irish construction activity” than before, said the bank, which blamed Brexit for some of the softening.

At 55.9 in March, the figure is down from a reading of 60.5 in February, but still well above the 50 mark that divides growth from contraction.

“[However] Irish construction firms continue to experience rapid growth in their activity levels,” it said.

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House-building activity led the way for the third month running on the index, followed by commercial activity, where growth fell back sharply, and civil engineering.

Despite a fall back in growth rates, employment in the sector is growing at its fastest rate since July 2018, according to the index, which added that “a further lengthening of suppliers’ delivery times was noted”.

"The demand for construction workers continues to be underpinned by new business which continued to rise solidly in March," said Simon Barry, chief economist for the Republic at Ulster Bank.

“Furthermore, firms themselves remain optimistic about the coming year, with 43 per cent of respondents anticipating higher output levels over the year ahead, with expectations of stronger customer demand cited as an important source of support.”

However, activity in the civil engineering sector – typically big infrastructure projects – contracted once again.