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Growth in construction industry hits seven-month high

Published 14/11/2016

Activity on housing projects also rose at a sharp and accelerated pace during October
Activity on housing projects also rose at a sharp and accelerated pace during October

Growth in the Irish construction industry has hit a seven-month high, new figures indicate.

Activity, new orders and employment all increased at faster rates in October, according to the Ulster Bank Construction Purchasing Managers' Index (PMI).

Companies also increased their purchasing activity, and confidence over future output also improved from September.

Simon Barry, a chief economist with Ulster Bank said: "Overall, the October results paint an encouraging picture of recent developments at Irish construction firms.

"Solid readings across the headline, new orders and employment indicators highlight that momentum behind the sector's recovery continues to look strong."

The PMI, a seasonally-adjusted snapshot designed to track changes, found t he commercial construction category was the best performer for the sixth successive month.

Activity on housing projects also rose at a sharp and accelerated pace during October.

The rate of new order growth was substantial, having quickened for the fifth consecutive month to the strongest since February.

As a result, c onstruction firms were encouraged to increase their staffing levels.

The rise in new business in October was also a key factor behind an expansion of purchasing activity by construction firms - among the sharpest since the survey began in mid-2000.

Meanwhile, higher demand for inputs led suppliers to increase their charges, and also resulted in delivery delays. The rise in input costs faced by construction firms during October was sharp and the fastest since August 2015.

Suppliers' delivery times lengthened at a much more marked pace than was recorded in September.

Business sentiment ticked up in October and remained strongly positive, with about two thirds of respondents predicting an increase in activity over the next 12 months.

Among the factors supporting optimism were predictions of improving market conditions and a good pipeline of work, the survey said.

Mr Barry added: "I mportantly, construction firms are continuing to benefit from robust increases in new business levels, with the new orders index rising to its highest level since February following a fifth consecutive monthly acceleration in October.

"Firms continue to report a strengthening in client demand amid a general improvement in economic conditions as an important contributor to the ongoing uplift in new business volumes.

"In turn, the healthy expansion of new orders continues to underpin increased demand for construction workers.

"The employment index rose sharply last month, with the pace of hiring accelerating to its fastest in eight months as almost one third of firms noted a rise in employment."

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