AFTER A BOOST in the Irish construction industry, there are signs that growth slowed down in the last month.
According to the Construction Purchasing Managers’ Index, which tracks activity changes – construction dropped to 57.1 in January from 63.1 in December.
While this signals an overall increase in total activity during the month, it is the weakest for almost a year. Activity has now increased in each of the past 17 months.
The month-on-month fall in the index was the largest in over seven years.
Commercial projects versus housing
By far the strongest monthly rise in activity was recorded on commercial projects, not housing projects.
The rate of growth in commercial activity remained sharp, despite easing for the third month running.
The index shows that there was a marked slowdown in the rate of growth in housing activity recorded, with the latest rise the weakest since August 2013.
Simon Barry, Chief Economist Republic of Ireland at Ulster Bank said that while this is the seventeenth consecutive month of activity gains, the index did fall back sharply last December – its weakest in almost a year.
While the loss of momentum in January is striking, the softening needs to be seen in the context of the exceptionally strong growth rates recorded through 2014 from which some pullback was always likely (October 2014 reading of the PMI was the second highest on record).
Despite the slowdown of growth in activity and new orders, this was not matched by employment.
The rate of job creation remained strong, although it was only slightly weaker than in December. Sentiment was up from December levels, the second-highest in the series history, behind the record reached last November.
This suggests firms retain a very positive view of the year-ahead outlook despite an apparent easing in the pace of activity in January.
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