Belfast Telegraph

Sunday 21 September 2014

More growth for construction sector

The rate of increase in construction was not as rapid as in October, but is still going in the right direction

The recovery of the Irish construction industry appeared to take another step forward last month, with the latest figures indicating further growth in the sector.

Construction activity increased in November - the third successive month of rising workloads, according to tracking data on the market.

The Ulster Bank Construction Purchasing Managers' Index (PMI) noted that the rate of increase was not as rapid as in October, but was still going in the right direction for building firms.

The seasonally adjusted index monitors changes in total construction activity. Any reading above 50 indicates an increase in activity. The total level of construction activity recorded in November was 58.8, compared to 59.4 in October.

While activity rates are on the up, the sector is still a pale shadow of the industry prior to the financial crisis.

Breaking down the data, the index recorded growth in housing and commercial construction activity, though found evidence the civil engineering sector was still contracting.

The increase in overall activity brought a pick-up in the rate of job creation in November while business outlook was at its highest recorded level of optimism since the survey began in June 2000.

Simon Barry, chief economist Republic of Ireland at Ulster Bank, said: "The November results of the Ulster Bank Construction PMI survey confirm that activity trends in the Irish construction sector continue to improve.

"The headline PMI index did fall slightly last month, but at 58.8 it remains well above 50, signalling solid ongoing expansion in activity levels.

"In keeping with the pattern of the last several months, the improvements are being underpinned by recoveries in both the housing and commercial arenas where activity has now increased in each of the past five and four months respectively.

"Near-term prospects for the sector appear favourable, judging by a further acceleration in the rate of growth of new business."

Mr Barry said the new orders index reached its highest level in more than seven years as firms reported higher demand both at home and abroad - spurring a third consecutive monthly rise in employment.

He added: "Moreover, optimism levels of survey respondents reached their highest levels since the survey began in 2000, helped by the recent improvements in construction activity and orders, and in the wider economy. Of course activity levels in construction remain extremely low following the 2007-13 crash. So, to reiterate a point we have made previously, the recent improvements in construction activity and confidence - as welcome as they are - need to be seen in the context of the huge declines of recent years."

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