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Construction activity growth for first time in four months - PMI

The rate of input price inflation accelerated to a three-month high on the back of higher energy, raw materials and transportation costs
The rate of input price inflation accelerated to a three-month high on the back of higher energy, raw materials and transportation costs

There was a return to growth in activity in the construction sector in September following three months of contraction, the latest monthly report from BNP Paribas Real Estate shows.

The Construction Purchasing Managers' Index captured signs of stabilisation in new orders while employment levels increased.

However, input cost inflation picked up and supply chain issues persisted with delivery times continuing to lengthen.

The overall index moved just above the 50 no-change mark to 50.2 in September from 46.9 in August.

Increases were seen in both commercial and housing activity in September, in both cases ending three months of contraction.

Civil engineering activity continued to fall, however.

The rate of input price inflation accelerated to a three-month high on the back of higher energy, raw materials and transportation costs with many of those surveyed linking price rises to the war in Ukraine.

Employment levels have increased now for 17 of the last 18 months with signs of stablisation in new orders seen as encouraging employers to take on more staff.

Purchasing activity fell again - albeit very modestly - taking the sequence of decline to four months.

The slight boost in overall momentum sparked renewed optimism in the 12-month outlook for activity.

Positive sentiment was recorded for the first time in four months, but confidence remained muted amid concerns about the potential for a wider economic downturn.

John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland, said the results pointed to some stablisation in the outlook for the months ahead.

"Solid expansion between January and May gave way to quite a sharp slowdown in construction activity over the summer months. However, operations now appear to have stabilised at this lower level with the September PMI reading broadly in-line with August's figure," he explained.

"Current activity levels appear to be reasonably well aligned with forward-looking sub-indices of the PMI, suggesting that the sector is neither anticipating a construction boom nor a collapse in the months ahead," he concluded.