Construction activity growth eases to four-month low in May
Activity in the construction sector eased to a four month low in May, according to the latest Purchasing Managers’ Index from Ulster Bank.
The Ulster Bank Construction PMI fell to 54.9 in May, down from a reading of 56.6 in April.
But despite the slowdown, the construction industry has marked more than five and a half years of continual expansion.
Ulster Bank said the housing sub-category recorded the fastest rise in activity of the three monitored sub-sectors for the fifth month in a row during May.
Commercial activity also increased, but at the slowest pace since August 2013.
Meanwhile, civil engineering activity declined for the ninth consecutive month, with the rate of contraction quickening slightly from April.
Ulster Bank also said that despite expanding at the slowest pace since December 2018, the rise in
new business was the 71st in as many months.
Construction companies told Ulster Bank that increased market activity and the starting of new projects were the main factors behind the expansion in new work last month.
And employment across the construction sector increased for the 69th successive month in May. But Ulster Bank noted that despite the solid growth, the rate of job creation eased from April to the slowest since March 2015.
Meanwhile, the rate of input cost inflation eased in May to the slowest since September 2016.
Simon Barry, chief economist at Ulster Bank, said that Irish construction firms continued to experience solid, though slower, growth in May.
“Very encouragingly, the residential sector remains a particular bright spot with housing activity continuing to expand sharply last month,” Mr Barry said.
“Commercial activity also very much remains in expansion mode, but the commercial PMI has now fallen for three months in a row, with the May reading marking the slowest pace of growth in nearly six years,” he added.
He noted that new business and employment levels continued to rise at healthy rates in May, albeit in line with overall trends, both indices eased last month.
He said this was particularly evident in the case of employment, with the rate of job creation dropping to its slowest pace in over four years.
But he added that this is best seen as a retreat from very elevated readings in recent months.
“Survey respondents remain optimistic about the sector’s prospects over the year ahead, with expectations of stronger customer demand cited as an important source of support,” the economist added.
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