The rate of growth in Irish construction activity quickened in July amid widespread reports of strengthening demand. New orders continued to increase at a substantial pace and companies raised employment and purchasing activity accordingly. Meanwhile, the rate of input cost inflation remained marked amid some reports of material shortages. The Ulster Bank Construction Purchasing Managers’ Index® (PMI®) – a seasonally adjusted index designed to track changes in total construction activity – rose to 60.7 in July from 58.4 in June. The reading signalled a fifty-ninth consecutive monthly rise in construction activity, and one that was sharper than in the previous month. Respondents pointed to increases in new work and specific strength in the housing sector.
Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, noted that:
“The latest results of the Ulster Bank Construction PMI survey show that Irish construction firms experienced accelerated rates of expansion in July. The headline 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.
“Activity growth was broadly-based in July, with firms operating in Civil Engineering reporting a welcome return to expansion – perhaps linked to the recent marked step-up in the growth of Exchequer capital spending. But as has been the case for much of the construction recovery to date, Commercial and Housing activity remain the main sources of the sector’s growth. Commercial activity again increased sharply in July, while particularly encouraging was a notable quickening in the rate of expansion in Housing activity where the PMI rose to an exceptional 63.9. Not only does this leave housing as the strongest-performing sub-sector, but it is one of the highest readings in the survey’s 18-year history. The latest CSO figures show housing completions were up over 25% y/y 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.”