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Construction PMI sees first rise in four months

Construction PMI sees first rise in four months

Construction activity picked up for the first time in four months in August – normally a quiet month for the industry – the latest Construction Purchasing Managers Index from Ulster Bank shows.

The construction PMI rose to 53.7 in August from 51.4 in July.

Ulster Bank said the improvement in August reflected a better performance across the three main sub-sectors – housing, civil engineering and commercial.

The housing sector saw the sharpest increase in activity last month and it remained the strongest performing category in August.

Commercial activity also continued to grow solidly, with the Commercial PMI rising to a five-month high of 55.1 in August from 54.7 in July.

But civil engineering remains an area of weakness, however, with respondents reporting a twelfth consecutive monthly fall in activity, albeit at a reduced pace in August.

Ulster Bank’s chief economist Simon Barry said that after the sharp weakening in the pace of construction activity recorded over the previous three months, the pick-up in the August PMI is an encouraging sign that construction growth regained some momentum as the sector completed its sixth year of recovery.

But he cautioned about the sector’s near-term prospects, noting that new orders moderated further, with the August reading marking the slowest pace of new business growth in four and a half years.

He also said the ongoing cooling in order flows is underpinning slower – but still positive – growth in demand for construction workers, with the pace of job creation easing to a near six-year low in August.

“Confidence about the coming year fell sharply in August, leaving the future activity index at its lowest level since 2010,” the economist said.

“The slippage in sentiment largely reflected worries about Brexit impacts, with some firms reporting that Brexit uncertainty is impacting work pipelines due to delayed decision-making among clients,” he added.

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