Irish construction firms continued to experience solid growth in activity in December according to the latest results of the Ulster Bank Construction PMI survey. The headline PMI did ease back last month, but this is an unsurprising development following the signs of deceleration also contained in the Manufacturing and Services PMI survey results for December, which together indicate that high virus case numbers contributed to some moderation of Irish economic growth momentum at the end of the year.
At 53.7, the headline Construction PMI still points to healthy growth in construction activity on a par with that experienced on average in 2019, while it also points to faster growth than signalled by the latest construction PMI for the wider Eurozone.
While the late-year easing of momentum in construction growth bears close monitoring, particularly in the context of risks posed by still-very high case numbers, the December survey results nonetheless offered some encouraging signs regarding the sector’s prospects as we move through the early part of 2022.
First, the input cost index fell for the second consecutive month, with a marked drop last month taking it to an 8-month low. While still at a very elevated level consistent with ongoing rapid increases in input costs, the readings at the end of last year do suggest that the intensity of cost pressures and related supply chain challenges is now easing somewhat.
Second, construction firms continue to benefit from sharp ongoing increases (albeit at a slightly slower pace) in new orders amid reports of improving demand.
And third, firms themselves remain confident about the coming year. Underpinned by strong pipelines of new work, expectations of further improvement in demand and confidence in housing market prospects, sentiment regarding the year-ahead outlook edged higher in December leaving it again well above the long-term average.
Over 46% of firms expect their activity to rise in the coming 12 months – the highest reading since August.