Sunday 22 July 2018

Sharp acceleration in construction activity is pushing costs up

(Stock picture)
(Stock picture)
John Mulligan

John Mulligan

A sharp acceleration in construction activity is putting increasing pressure on input costs and supply chains, adding to difficulties the sector is already experiencing because of tight labour availability.

The latest Ulster Bank Construction Purchasing Managers' Index (PMI) published this morning shows total activity across the Irish construction sector continued to increase last month. Higher output was also reflected in faster growth in new orders, input purchasing and employment.

The report noted there had been a "marked increase" in input costs during April, especially in steel and insulation.

The PMI index rose from 57.5 in March to 60.7 in April. Any figure over 50 indicates expansion.

Simon Barry is a senior economist at Ulster Bank
Simon Barry is a senior economist at Ulster Bank

The rate of growth was the second-fastest pace since May 2017. The surge in April was also partly attributable to poor weather in the first few months of the year.

Simon Barry, chief economist for the Republic of Ireland at Ulster Bank, said construction firms experienced "strong and faster rates of expansion" last month.

He added there was a "very sharp acceleration" in commercial construction activity, taking the PMI reading for that segment, at 63.1, to its highest level since last May. Housing activity rose to an 11-month high.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business