Construction growth rate at eight-year high
THE beleaguered construction industry is feeling the impact of a more positive economic environment with recovery having gathered pace in October, according to a new survey.
The Ulster Bank Construction Purchasing Managers' Index (PMI) showed the rate of growth in the sector is at its highest level in eight years.
While the rate of job growth has barely changed, construction firms have been buying more raw materials and working assets in response to an improving climate.
The Construction PMI for October jumped to 59.4 from 55.7 in September. Any reading below 50 signals contraction and any figure over 50 means expansion.
Simon Barry, chief economist with Ulster Bank, said the latest survey provides further evidence that a "recovery dynamic" is beginning to take hold in the Irish construction sector.
"Accelerating increases were recorded in both housing and commercial activity, with the rate of expansion in housing reaching levels last seen almost nine years ago," he said.
But the current rate of expansion comes off a very low base. The number of homes being built in Ireland is currently at its lowest level since records began more than 40 years ago.
The number of homes being built here hit 94,000 in 2006. This year, just 6,000 are expected to be constructed, compared to the 20,000 a year that it's estimated need to be built to keep pace with the demands of a growing population.
Mr Barry said the survey also showed employment in the sector rose in October for the second month in a row, but at a marginal rate. He said the rise suggests improved activity patterns are translating into a stabilisation in staffing levels.
"Near-term prospects appear relatively promising as the new orders index posted a fourth consecutive monthly rise, with the rate of increase in new business levels reaching its fastest pace in seven years," he said.
"These signs of improvement in the sector are very welcome indeed, but are best viewed in the context of the enormous slump in activity which dogged it for much of the past six years," Mr Barry explained.