Tuesday 18 June 2019

Building sector shows first green shoots in six years

The troubled construction industry saw the strongest improvement in activity between July and September
The troubled construction industry saw the strongest improvement in activity between July and September

Thomas Molloy

SEPTEMBER saw the first pick-up in the construction industry in six years as the housing sector gathers steam and builders report near record levels of optimism, according to the sector's most closely watched and authoritative indicator.

Last month's pick-up is one of the clearest signs yet that the recovery in certain parts of the economy is spreading to sectors that have been languishing despite the improvements seen in the capital and the food industry, according to the Ulster Bank Construction Purchasing Managers' Index.

The activity in the construction sector rose for the first time in more than six years as new orders expanded at a sharp and accelerated pace. That led companies to buy more materials and keep on workers.

Sentiment among construction firms regarding the 12-month outlook was one of the strongest in the history of the series.

The seasonally adjusted index, which is designed to track changes in total construction activity, posted a reading of 55.7 in September compared to 49.7 in August. Panellists reported that higher levels of new orders and signs of improvements in economic conditions had contributed to growth.

The latest reading implies an extraordinary turnaround for the sector that has posted relentless decline after decline despite improvements in the manufacturing and services sectors.

'EXPANDED'

"Significantly, overall activity rose for the first time in over six years," said Ulster Bank economist Simon Barry. "Housing was again the strongest sub-sector, as activity expanded at its fastest pace since December 2005."

Commercial activity also saw an acceleration in its rate of expansion last month, although respondents continue to report falls in civil engineering activity. Still, even here, the pace of decline eased to its slowest in some six years.

Employment rose to just over the 50 mark last month, breaking a sequence of declines that extends back to May 2007.

A separate survey called the national housing construction index, compiled by Link2Plans, also indicated tentative signs of recovery in the construction sector in recent months.

The survey shows that six counties saw planning application increases in the first eight months of the year compared to the same period last year. Those counties were Kildare (12pc), Dublin (7pc), Carlow (7pc), Donegal (4pc), Monaghan (4pc) and Kerry (2pc). Only two counties saw increases in the same period last year; Donegal and Leitrim.

Five counties saw an increase in the number of building actually begun. They were Roscommon, Longford, Meath, Dublin and Wexford.

Irish Independent

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