Construction Activity Slows in August

Activity in the construction sector has fallen since July and declined for the first time in three months in August, according to the latest monthly measure from Ulster Bank Ulster Bank Construction Purchasing Managers’ Index® (PMI®), a seasonally adjusted index designed to track changes in total construction activity.

Construction Activity Slows in August

After bouncing back in the preceding months as Covid-19 restrictions were lifted and construction sites gradually opened up again, Irish construction activity stalled in August.

Simon Barry, chief economist with Ulster Bank said."Following two months of post-lockdown increases in activity in June and July, respondents reported that overall activity slipped back into contraction territory last month, albeit that the pace of contraction was nowhere near as severe as during the peak of the crisis in April and May.

“The weakness was broadly based, with each of the main sub-sectors reporting declining activity last month, while overall new orders also dipped having recorded very solid growth in July. Some firms have continued to report ongoing recovery in activity and orders, though in August this was more than offset by those who reported a drop. High levels of market uncertainty linked to the effects of the pandemic and some recent signs of a cooling in the wider economy’s recovery momentum weighed on the August results, including in relation to sentiment about the sector’s future prospects.

"Nonetheless, respondents continued to express optimism in the year-ahead outlook reflecting expectations that, despite some prominent risks and headwinds, the economy’s recovery will stay on track. Furthermore, with leading indicators such as the housing commencements data continuing to point to further upside for housing output, we would be surprised if the Housing PMI in particular doesn’t show renewed improvement in the months ahead.

High levels of market uncertainty linked to the effects of the pandemic and some recent signs of a cooling in the wider economy's recovery momentum weighed on the August results, including in relation to sentiment about the sector's future prospects."

Construction Activity Slows in August

Stockbroker Goodbody, which compiles a quarterly report on housing output, said it expects housing completions to fall by a fifth this year.

It expects 16,500 units to be completed this year with 19,500 next year.

The Central Bank estimates that 34,000 new units per year will need to be constructed for the next decade in order to meet demand.