Construction rises for 35th month

THE construction sector expanded once again in July, according to the latest Ulster Bank Purchasing Managers’ Index (PMI).

The index, which records output and employment in the sector, has expanded every month since September 2003, though activity did ease a little in July.

Ulster Bank chief economist Pat McArdle said the latest rise in construction activity was due to higher new order volumes and efforts to meet deadlines for existing contracts.

“July was another good month for construction with output, new orders and employment all performing strongly. The main impetus came from civil engineering which is now close to all time highs, at least in so far as the PMI survey is concerned,” Mr McArdle said.

“The rate of expansion in housing also picked up. However, the commercial sector rate of expansion, though robust was less than at any time since April 2004. This was sufficient to offset the other two components and cause the rate of increase of the whole construction sector to ease back modestly.

“Confidence remains high with little sign of any slowdown in housing activity. It looks like the industry is on target to deliver another record level of house completions this year.”

According to the survey, in each month of the past year, all three monitored construction areas — civil engineering, housing and commercial building — have registered activity growth.

In July, the civil engineering area was the best performing for the second month in succession. The rate of expansion in civil engineering activity was the sharpest since November 2004.

Housing activity increased markedly, whilst commercial activity rose at a robust pace.

“Irish constructors recorded a strong rise in new order volumes in July. New business has now increased for 35 consecutive months. Anecdotal evidence suggested that marketing campaigns and competitive tendering had led to new order gains. However, the rate of growth of new business was the weakest since February 2004.”

Job-creation remained robust in July. Exactly 26% of firms indicated that extra staff had been hired since June, which many linked to efforts to increase site activity. Employment has risen every month since September 2003.

In July, 42% of Irish construction firms were confident of higher activity levels in a year’s time. Firms linked optimism to planned marketing campaigns and recent growth of new business.

Input prices paid by Irish building firms rose sharply in July. Input price inflation was the most marked for ten months as firms reported paying higher prices for metals and fuel.