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Published in Commercial Property on 10/02/2020

Construction Industry Slows Despite Sharp Increase in Commercial Sector

#PMI

CNI Editor reports

A new survey showed that the pace of the construction industry’s expansion slowed in January despite a sharp pickup in activity in the commercial sector.

Ulster Bank’s monthly Construction Purchasing Managers’ Index reading for January showed the industry was still growing with a reading of 50.9, although that rate was slower than in December when it recorded 52. A reading over 50 indicates an expansion from the prior month.

“Respondents reported particular strength in commercial activity where a third successive monthly increase saw its index pick up to an 11-month high,” said Simon Barry, chief economist for the Republic at Ulster Bank.

The reading for commercial property surged to 55.7 from 53.6 in December.

“This leaves growth in commercial projects running at a very solid pace above the long-run average for the survey, which spans the past 20 years,” Mr Barry said.

By contrast, housing activity lagged and the index fell back to a reading of 48 following a bounce in December to 51.8.

The report said that expectations data suggested firms are expecting activity to rise over the course of this year and the bank’s sentiment index hit a 12-month high with more than 43pc of panellists predicting gains.

There have been the first signs that rising rents are now coming to an end, according to surveys of estate agents, while the price of an average house has fallen nationally over a year for the first time since the economic recovery, according to the Q4 Irish Independent/REA Average House Price Index.

The average nationwide price of a three-bedroom semi-detached house, Ireland’s most typical home type, has fallen in value by 0.6pc over the past year. This follows a 4.6pc annual rise in values in 2018.

Ulster Bank’s survey showed that hiring in the construction industry was on the rise once more.

Rising new order volumes led constructors to expand their staffing levels again in January, extending the current sequence of job creation to just shy of six-and-a-half years, it said.