A steady rise in building activity

Activity in the construction sector expanded for the 10th month in a row led by residential building, according to the Ulster Bank Construction Purchasing Managers’ Index.

Employment also increased for the 10th month in a row in June, although at the lowest rate since January.

House prices in urban areas, particularly south Dublin, have soared in the past year due to a lack of supply. According to the ESRI, there is a demand for new housing units of between 20,000-25,000 until 2030.

According to the latest Ulster Bank PMI, there are signs of a sustained uptick in the residential sector. Overall, it recorded a reading of 59.9 in June, down slightly from 60.2 in May but still signalling a sharp expansion of activity in the sector.

Activity has risen continuously since September 2013.

“The residential sector was the best-performing of the three monitored construction categories in June, with activity on housing projects increasing at a substantial and accelerated pace. Commercial activity continued to rise markedly, albeit at a slower rate than in the previous month. Meanwhile, a solid decline in civil engineering activity was recorded, with the pace of reduction faster than that seen in May,” said Ulster Bank in a statement.

“Looking ahead to the second half of the year, near-term prospects for the Irish construction sector continue to look favourable.

“Of particular note is the continued buoyancy of new orders as firms again reported a sharp increase in new business during June, marking the 12th consecutive month of rising order levels.

“The strong trends in activity and new business continue to underpin job creation in the sector as staffing levels were raised for the 10th month in a row in June, albeit at a less rapid pace than in recent months,” added Ulster Bank economist, Simon Barry.