Construction enjoys 8-year high

The construction sector grew at its fastest level over the first three months of this year since January 2006, according to Ulster Bank.

Its construction purchasing managers index reached 60.2 at the end of March, a big increase on the 56.2 level at the end of February.

There was an improvement across most sub-categories including new orders and employment levels.

“Housing activity continued to rise sharply in March with last month representing the ninth month in a row of expansion linked to residential projects,” said Simon Barry, Ulster Bank’s chief economist.

“Commercial activity also continues to expand briskly, while the pace of decline in civil engineering eased for the second month running.

“Employment rose for the seventh month in a row last month, and at the fastest pace since May 2006. While employment in construction remains at depressed levels following the severe job-shedding which took place over the downturn, these latest trends are an important indication that improving workloads are translating into stronger, and badly needed, job creation.”

The latest ESRI quarterly review of the economy last week showed that supply of new housing is well below trend demand.

It estimated that there would be between 20,000 and 25,000 household formations every year until 2030. However, only 8,000 new units were built last year, the lowest rate in 40 years. The ESRI predicts 12,000 new homes will be built this year and 15,000 next year.

John Fitzgerald, ESRI’s chief economist, cited lack of credit supply to property developers as well as planning issues among the factors leading to a supply constraint.

The Sunday Times has reported that Ulster Bank is on the verge of selling loan portfolios valued between €180m and €220m in what is expected to be the biggest release of prime residential landbanks in Dublin since 2008. The main landbanks are located in Portmarnock and Adamstown.