The rate of growth in construction activity fell sharply in February, according to the latest Ulster Bank Purchasing Managers Index. The monthly survey, which gives an indication of activity, employment and sentiment from key managers in the sector - had been showing rapid expansion. The sector is still growing, according to February's figure, but at a much slower pace than in recent months. The Central Bank cap on mortgage lending and the phasing out of capital gains tax relief for property investors - both of which are seen as having cooled demand - are seen as the main reasons for the slowdown.
Simon Barry, chief economist with Ulster Bank, says the bank's latest survey on the construction industry points to a notable loss of momentum last month. But the economist says the reading should be seen in context to the really rapid growth rates seen during most of 2014. Easing growth rates were seen in all three of the sectors - housing, civil engineering and commercial. Mr Barry says the housing sector shows a mixed picture with growth in the sector last September reaching record levels. Last year saw a record growth level of 33% to get up to 11,000 units, this growth level was higher than in the boom years up to 2006, he adds. Some of the weakness seen in February is linked to higher levels of uncertainty after the recently introduced Central Bank regulations on mortgage lending, as well as the expiry of the Capital Gains Tax relief.
Mr Barry says it is important to highlight that we are still talking about a recovery story, with expansion still being recorded in the housing industry as well as in the commercial sector. Today's figures may be a temporary blip in an otherwise positive trend, he says, adding that it will take some months of data to see where the industry is going. It will also take the market some time to adapt to the new Central Bank rules, he adds. Optimism levels among building firms are also still pretty high, Mr Barry says, with a large majority of companies predicting that activity levels will continue to rise as the year continues. Builders are actually more optimistic than the boom times of 2003-2006, he adds.
MORNING BRIEFS - Permanent TSB is set to announce plans to seek up to €550m from private investors later this week. The state-owned lender reports annual results on Wednesday. PTSB failed the EU-wide banking stress tests last year and needs an injection of fresh capital to meet tight rules on resources banks must have on hand to guard against possible future losses.
*** Apple launches Watch this evening at 6pm Irish time, its foray into the wearable technology market. The consensus among analysts is that Apple will sell around 15 million of the smart watches which can perform a host of internet-enabled functions ranging from heart-rate monitoring to mobile payments. Sales in that range would add up to €7 billion in revenue for the world's most valuable company. Apple watch prices stretch from $350 up to $10,000 for the 18 karat gold Watch Edition. While the US launch is taking place today, Apple Watch won't be available in Europe until April.
*** The euro continued falling in overnight trading as the European Central Bank prepares to embark on its €1.1 trillion programme of bond-buying. The ECB will buy assets, including government debt, in an effort to stimulate lending and economic activity and stave off the threat of a persistent trend of low consumer demand and falling prices.