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Construction sector more upbeat about prospect of recovery as restrictions ease

Jump in confidence underpinned by the expectation of improved business conditions

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Almost 60pc of construction firms expect an expansion of activity over the next 12 months

Almost 60pc of construction firms expect an expansion of activity over the next 12 months

Simon Barry

Simon Barry

/

Almost 60pc of construction firms expect an expansion of activity over the next 12 months

The construction sector is increasingly upbeat as the economy starts to reopen, but new data published today shows a continuing sharp contraction in the trade last month.

The latest Ulster Bank Construction Purchasing Managers’ Index, published this morning, shows that the gauge posted a recording of 30.9 in March. Any figure below 50 signifies contraction and any figure over 50, expansion.

The reading was 27 in February, and March marked the third month in a row of contraction as the country endured its latest lockdown.

The reading for residential building activity touched 33.8 in March, compared with 23.8.

Activity on some residential sites restarted as early as February, despite the lockdown.

“While the pace of decline in overall activity eased somewhat relative to the very extreme weakness registered in January and February, the March results again highlight that activity was markedly restrained by the pandemic-related restrictions throughout the first quarter,” said Simon Barry, chief economist Republic of Ireland at Ulster Bank.

The index of activity in the commercial construction sector was virtually unchanged last month, at 31.3. In civil engineering, the reading rose from 19.5 in February to 23.8 last month.

Mr Barry said respondents to the latest Ulster Bank survey are becoming “increasingly upbeat” about the prospects of recovery.

“The future activity index jumped again in March to stand at its highest level in two-and-a-half years as almost 60pc of firms expect an expansion of activity over the next 12 months,” he said.

“The jump in confidence was underpinned by the expectation of improved business conditions for the sector as restrictions are eased and as pent-up demand is released,” said Mr Barry.

“Indeed, the recent Government announcement that residential and childcare-related construction can restart from this week marks an important, albeit partial, step in the sector’s recovery journey,” he said.

Employment in the sector has also continued to fall, noted Ulster Bank.

Despite a continuing decline in purchasing activity in the sector, Ulster Bank noted that the rate of input-cost inflation accelerated for the third month in a row last month, and at the fastest pace since February 2018.

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