Business Irish

Saturday 20 September 2014

Construction sector 'on mend' as optimism nears record high

Published 09/06/2014 | 02:30

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Expansion within the building sector continued last month, although the rate eased compared to April
Expansion within the building sector continued last month, although the rate eased compared to April

The economy appears to be firing on all cylinders, with fresh data this morning pointing to continued expansion in the construction sector.

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It bolsters figures last week that were described as revealing a "blistering" pace of expansion in services, the fastest rate of employment growth in the manufacturing sector since 1999, and a tax take that was ahead of forecast for the first five months of the year.

The Ulster Bank Construction Purchasing Managers' Index (PMI) for May shows that expansion within the building sector continued last month, although the rate eased compared to April.

The bank's chief economist for the Republic of Ireland, Simon Barry, said the sector is "on the mend" and optimism with the trade remains near a record high.

The index stood at 60.2 in May, down from 63.5 in April. Any figure above 50 on the gauge indicates expansion, any figure below, contraction.

Mr Barry said that while the index slipped last month, it's only slightly below the near record high witnessed in April.

"The recovery continued to be centred on housing and commercial activity, with both areas posting substantial rises again," according to Mr Barry.

But civil engineering has, so far, failed to match the return to growth seen in other divisions of the construction industry. The gauge of civil engineering activity stood at 47.9 last month compared to 41.8 in April.

Mr Barry said the rate of growth in new orders within the overall construction sector "remained sharp" in May, despite easing since April.

"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," the economist said.

He said another notable aspect of the latest survey is a "sharp acceleration" of cost inflation amid reports that suppliers have started to raise their charges in response to strengthening demand for inputs.

There is increasing evidence of housing construction sites which were mothballed as the recession struck being reopened. Foreign investors have also been keen to snap up development sites in prime areas.

Irish Independent

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