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Survey Shows September Drop in Irish Building Activity

A recent survey shows that building activity slowed down in September, but the sector is still growing at a solid pace.

For the first time since last June, all three industry sectors (residential, commercial, and civil engineering, which primarily consists of bigger, state-funded projects) grew last month.

According to recently released figures, the overall revival in the building industry lost some momentum in September but kept growing at a solid pace.

The Ulster Bank Construction Purchasing Managers’ Index (PMI), which monitors and tracks the activity in the sector every month, dropped to 55.8 last month from 56.5 in August, suggesting that the rate of expansion slowed while the industry itself grew.

The benchmark for the index is 50. Any result above that particular figure indicates that the industry has expanded, while any reading below signifies a slowdown.

The 55.8 reading taken last September means that the industry has been enjoying a healthy degree of expansion for two years. September 2013 recorded the first month of growth since 2007, before the crisis hit.

Housing went up to 55.6 from 54.4. Growth in the commercial sector slowed down slightly, from 56.9 to 56.4 while civil engineering rose from 48.4 to 51.7.

Simon Barry, Ulster Bank’s chief economist in Ireland, said that the build industry continued to experience slower but steady growth in September.

Mr Barry confirmed that the headline PMI decreased to its lowest point since last March, but September’s reading is still well above the ‘break even’ level of 50. This suggests that construction firms are continuing to experience widespread expansion.

Specialists in Construction Insurance

He said that while the general picture is still one of ongoing expansion in the construction sector, the decline in last month’s headline PMI index represented the third consecutive monthly decrease.

A pattern like this suggests that the momentum powering the recovery slowed slightly through the third quarter, a trend that should be closely watched in the months ahead, Mr Barry added.

However, he pointed out that a strong and steady trend in new orders suggests that there is no reason to be overly concerned as of yet.

New order volume increased at a speedy rate last month and the rate of activity increased for the second month in a row.

Job numbers continued to go up as companies hired more staff to accommodate an ever-increasing demand. They also upped their use of subcontractors, albeit at a slower pace.

The rate at which costs have been going up has also slowed down, and most of the increases reported in September can be attributed to the weakness of the euro, which pushed up the prices of imported materials.

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