Housing activity picks up in Northern Ireland

December 14, 2017 / Isla MacFarlane
Housing activity picks up in Northern Ireland

Construction activity increased sharply during November in Northern Ireland, with the rate of growth accelerating from the previous month.

New orders and employment also rose at stronger rates, related to improving economic conditions, stronger client confidence and efforts to expand activity. The Ulster Bank Construction Purchasing Managers’ Index® (PMI®) – a seasonally adjusted index designed to track changes in total construction activity – rose to 56.7 in November, up from 54.5 in October and pointing to the fastest rise in activity in five months.

The sharp increase extended the current sequence of expansion to 51 months. According to respondents, higher new orders was the main factor leading activity to rise.

Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, said, “Growth in Irish construction activity re-accelerated in November, according to the latest results of the Ulster Bank Construction PMI survey. The rate of overall expansion picked-up from October’s multi-month low as the headline index rose from 54.5 in October to 56.7 in November, in the process reaching a five-month high.

A welcome increase in housing activity saw it record the sharpest increase in activity, thus remaining the strongest performing category last month.

“Survey respondents mentioned that improving economic conditions continue to underpin expansion in both client demand and construction staffing levels, evident in a pick-up in the New Orders and Employment indices in November,” said Barry. “Sentiment about future activity prospects again edged lower in November, in the process falling to its lowest level since August 2013. However, this is best seen as a modest retreat from exceptionally elevated levels as confidence levels remain solidly optimistic, with around half of all firms expecting activity to increase over the coming year.”

For the second month running, the housing sub-sector was the best performing of those covered by the survey. Activity on residential projects increased sharply, and to the greatest extent since June.

General improvements in economic conditions and stronger client confidence resulted in a further increase in new orders, the fifty-third in as many months. Moreover, the rate of growth quickened from the previous month. The rate of job creation also quickened in November, with employment increasing sharply during the month.

Respondents indicated that staffing levels had been raised in line with higher activity requirements and as part of efforts to meet deadlines. As well as raising employment in line with higher activity requirements, constructors also increased purchasing activity. The rate of expansion quickened for the third successive month and was the fastest since June.

Suppliers’ delivery times lengthened again as higher demand for inputs imparted pressure on vendors. That said, the deterioration in supplier performance was the weakest in 14 months. Input costs continued to rise sharply, with higher prices for raw materials reported by panellists. Insulation was mentioned as costing more by a number of respondents.

Although Irish construction firms generally remained strongly confident regarding the 12-month outlook for activity, sentiment dipped again in November and was the lowest since August 2013.

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