Growth in construction continues in August despite slowing slightly

Growth in construction continued through August despite slowing slightly on the previous month, data published on Monday shows.

Ulster Bank's construction purchasing managers' index (PMI) shows that activity in commercial development, house-building and public projects increased again last month.

August was the 60th consecutive month that the index showed growth, meaning that the Republic’s construction industry has been expanding for five years after pulling out of a deep recession sparked by the 2008 financial crisis.

The index, which follows the sector’s performance every month, hit 58.3 in August, indicating a sharp rate of growth. Ulster’s PMI takes 50 as its benchmark. Any reading above that figure indicates that the industry expanded on the previous month, while any result below that shows that it shrank.

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August’s reading was below the 60.7 recorded in July, which shows that while activity increased it did so at a slower rate last month than in the previous one.

The figures show that house-building was the strongest performer, reaching 60.3 in August against 63.9 the previous month.

Commercial building, which includes offices and factories, recorded a reading of 57.7, from 60.9.

Civil engineering, which covers State-funded projects such as roads, schools, water-treatment plants and other infrastructure, advanced at the slowest rate, hitting just 51.5. Ulster Bank noted that August was the second month running in which this sector recorded growth.

Positive growth

Simon Barry, chief economist, Republic of Ireland, Ulster Bank, noted that Irish builders experienced solid but somewhat slower growth in August.

“The headline PMI eased back from what was an extremely elevated reading in July to stand at 58.3 in August, but this is still very much a level which signals ongoing rapid gains in activity. For the second consecutive month all three sub-sectors registered positive growth, with housing remaining the strongest performing category.”

Mr Barry added that while the housing index slowed slightly, July’s reading had been one of the strongest ever.

He argued that 60.3 pointed to very rapid expansion, and suggested that robust growth in house-building would be sustained through the third quarter of the year.

The economist also pointed out that many companies taking part in the survey predicted that new residential building would be a key contributor to continued growth in the industry.

Mr Barry said that while some elements of the index showed that construction’s recovery had further to go, he said the future was not without its challenges, including capacity constraints, that is, not having the resources to meet demand.

He said that builders remained confident about the industry’s prospects.