Construction activity continued to slow in August – PMI
A slowdown in construction activity continued in August, according to the latest construction purchasing managers index from BNP Paribas Real Estate Ireland.
There was a sharper contraction in activity last month than in July, as a continued fall in demand saw new orders shrink and the rate of employment growth ease.
The PMI stood at 44.9 in August, compared to 45.6 in July.
Anything below 50 represents a contraction in activity.
The slowdown was most pronounced in the commercial sector, which had its sharpest contraction in almost two and a half years.
“This is a welcome development as it limits the potential for oversupply in areas of commercial property, such as offices, where vacancy rates have been rising,” said John McCartney, director and head of research at BNP Paribas Real Estate Ireland.
Housing activity also slowed, but at a softer rate.
That has sparked caution among construction firms when it comes to hiring. Employment levels did rise slightly in the month, but job creation was the least pronounced in four months, according to the report.
There were also signs of price pressures rising again, with the pace of input price inflation at its most pronounced since April.
Almost a third of responding firms noted a rise in input costs during the month, compared to just 4% that saw a reduction.
“This jars somewhat with the latest CSO data on building materials and labour costs, but could be an early sign that re-emerging energy price increases since June are beginning to impact the sector,” Mr McCartney said.
Despite this, Irish firms remained broadly optimistic about their outlook, he said.
“Despite these new dynamics, key aspects of the PMI narrative remained unchanged,” he said. “Surveyed firms took-on additional staff for the eighth successive month in August and 88% of panellists expected to be as busy or busier in 12 months’ time.”