The recovery in the Irish construction sector gathered pace in July, helped by a series-record rise in housing activity.
The rate of growth in new business quickened sharply to the strongest since November 2004 and the pace of job creation picked up. The Ulster Bank Construction Purchasing Managers’ Index®(PMI®) – a seasonally adjusted index designed to track changes in total construction activity –rose to 62.6 in July from 59.9 in the previous month and signalled the fastest rise in activity in three months. Total activity has now increased in each of the past 11 months with panellists linking the latest rise to higher new orders, and in some cases the release of projects that had previously been on hold.
Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, noted that: “The Irish construction sector has made a strong start to the third quarter, according to the results of the latest Ulster Bank Construction PMI survey. Overall activity increased sharply in July, with the rate of growth quickening to its fastest in three months. The July results marked the eleventh consecutive month of expansion among Irish construction firms – an important indication that a sustained recovery is taking hold.
“Housing was a particular bright spot as a further strong acceleration in activity last month took the rate of growth to the fastest in the survey’s 15 year-history. It is important to recognise that levels of residential activity remain xtremely low following the huge correction which took place over 2007- 2013. Nonetheless, the evidence provided by the PMI – and indeed other data sources, including Department of Environment figures on house completions – indicates that housing activity trends are clearly on an improving trajectory. Also offering considerable encouragement was the strength of new business flows reported by respondents last month. The rate of growth of new orders picked up markedly to the strongest since November 2004, thus providing a solid basis for expecting that overall activity levels should continue to expand solidly in the months ahead.”
Record increase in housing activity Strong growth was recorded with respect to housing and commercial activity in July. Moreover, the rate of expansion in activity on residential projects was the sharpest in the history of the survey which began in June 2000. Although civil engineering activity continued to decrease, the rate of contraction was only marginal and the slowest in the current sequence of decline.