13 Aug 2018 | 10.26 am
PMI Points To Surge in Housing Construction
Consumer spending more muted in July
13 Aug 2018 | 10.26 am
The rate of growth in the construction sector firmed through July, according to the PMI report from Ulster Bank, with the index increasing to 60.7 from 58.4 in June.
The Construction PMI is a seasonally adjusted index tracking changes in total construction activity, and the latest reading signals five years of consecutive monthly rise in construction activity.
New orders continued to increase at a substantial pace and companies raised employment and purchasing activity accordingly. The rate of input cost inflation remained marked, amid some reports of material shortages.
The housing category recorded the fastest rise. Commercial activity also increased sharply over the month, while civil engineering activity returned to growth following two consecutive months of decline.
Ulster Bank chief economist Simon Barry commented: “Theheadline PMI picked up from what was already a highly elevated reading of 58.4 in June to stand at 60.7 last month, a level consistent with very rapid growth in activity. Firms continue to benefit from sharp rises in incoming new business flows as they report ongoing improvement in client demand for their services.
“In turn, the buoyancy of activity and orders patterns continues to underpin strong demand for construction workers, with the pace of job creation remaining substantial in July, albeit not quite as exceptionally strong as June.
“The latest CSO figures show housing completions were up over 25% year on year in Q1. The encouraging signal from the more timely housing PMI suggests that rapid growth in housing output has been sustained in the period since then.”
Visa’s Consumer Spending Index, also produced by IHS Markit, which measures expenditure across all payment types (cash, cheques and electronic payments), signalled continued growth of household expenditure during July, albeit at a less marked pace than was seen in June.
Consumer spending rose 2.3% year-on-year, down from 5.5% in June but still signalling a solid pace of growth during the month. Household expenditure has now risen on an annual basis throughout the past 17 months.
At 4.9% year-on-year, the rate of expansion in spending via eCommerce was marked despite easing for the third month running. The increase was much sharper than that seen through Face-to-Face channels, where spending was up only slightly (1.0%).
The Household Goods sector continued to record the sharpest rate of expansion of the eight broad categories, with spending up 8.1% year-on-year in July. Marked increases were also seen in the Transport & Communication (5.6%) and Hotels, Restaurants & Bars (5.0%) sectors.
Six of the eight categories registered slower increases in expenditure than in June. The only sector to see an outright decline in spending in July was Clothing & Footwear. The -0.7% year-on-year reduction in expenditure in the sector ended an eight-month sequence of growth.
Visa’s Philip Konopik commented: “The ongoing rise in Irish consumer spending reflects the buoyancy of the economy. July expansion is typically weaker as it is normally a period when retailers hold sales.”
Andrew Harker at IHS Markit said: “Slower growth was relatively widespread, with no sectors seeing a pick-up in the pace of increase.”