5 things we learned from the latest construction PMI
The construction industry seems largely Brexit proof
1) Construction may be the only sector unaffected by Brexit
Today’s construction purchasing manager’s index makes one thing clear: now with more than three years of consecutive monthly growth, the construction sector has shown a resilience that no other sector has. Brexit effects meant that the manufacturing sector was hit with a slowing of growth in August for the first time in three years. And September saw the weakest growth for the services sector in more than three and half years. But with the crash knocking the bottom out of the construction sector’s world more than any other, it had a lower starting point. It’s also not as internationally exposed as the export-driven manufacturing and services sectors.
2) The sector has loads of room for international expansion
That the construction sector is not as internationally exposed also means that it actually has room to expand overseas. Just last week, Graham Watts, the chief executive of Britain’s Construction Industry Council, pointed out that Britain’s housing industry does not have the capacity to meet its target of one million homes by 2020. “So if you're an Irish house builder looking to expand, there is a burgeoning marketplace just across the Irish sea,” he said.
3) All areas of construction are now growing
Although it is still the weakest monitored category in the sector, civil engineering saw a return to growth. Commercial construction was again the one with the strongest registered growth, with housing activity not far behind. And with 60 per cent of the increased spending envelope due to be allocated to housing initiatives in tomorrow’s budget, the sector is in pole position to capitalise on further expected growth.
4) The use of sub-contractors is coming back in vogue
The rate at which companies outsourced work to sub-contractors grew the fastest in three months. While job numbers in the sector continued to rise, this meant that job growth was at its weakest in 18 months, something also a result of the tendency in the sector for companies not to replace workers who left their posts.
5) The sector is still bullish about the Irish economy
Although confidence fell slightly compared to the previous month, companies were, on the whole, largely optimistic. After 39 months of consecutive growth in new orders – and the fastest rate of growth in several months – those surveyed said that they felt positive about the sector and the wider Irish economy.