Is civil engineering in Ireland finally about to see an upswing? The latest Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – has stated that last month, civil engineering activity decreased at the slowest pace since the end of 2007. The report found a sharp expansion in commercial activity in May. The commercial sector was the best-performing, while a strong expansion in housing activity was also recorded during the month. Although activity on civil engineering projects continued to fall, the rate of decline slowed sharply to the weakest in the current sequence of contraction, which began in December 2007. [caption id="attachment_15005" align="alignright" width="460"] Click to enlarge[/caption] The recovery in the Irish construction sector would appear to be continuing, according to the May figures. Although rates of expansion in activity, new orders and employment all eased from the highs seen in the previous month, they remained strong and companies were again optimistic regarding growth over the coming year. A marked acceleration in the rate of input cost inflation was recorded as suppliers took advantage of improved demand for inputs to raise their charges. The PMI posted 60.2 in May, down from the previous month’s reading of 63.5 but still pointing to a sharp increase in total construction activity. Activity has now risen in each of the past nine months, with the latest expansion linked to higher workloads and improving confidence. No panel data is released or the response rate. "The latest PMI signals ongoing strong monthly growth of activity, with May’s headline reading only slightly below April’s near-record high. The recovery continued to be centred on housing and commercial activity, with both areas posting substantial rises again,” said Simon Barry, chief economist – Republic of Ireland, Ulster Bank. "The rate of growth in new orders also remained sharp, despite easing from the previous month. Companies reported success in securing contracts for work both in Ireland and abroad and were confident that these trends would continue over the coming year, leading to further growth of activity during the next 12 months. This optimism encouraged firms to take on extra staff and raise their purchasing activity, in both cases at marked rates.” Another notable aspect of the latest data was a sharp acceleration of cost inflation amid reports that suppliers have started to raise their charges in response to strengthening demand for inputs. “Overall, the May data re-affirms the recent view of a sector on the mend,” Barry added.