Construction is at its fastest in five months

Construction activity rose at its fastest rate in five months in March but the civil engineering sector remains weak.

That is according to the latest Ulster Bank Construction Purchasing Managers’ Index, which showed activity rose for the second month running to 60.8 in March from 57.9 in February. Any reading over 50 represents an expansion in activity.

Ulster Bank said the index pointed to a sharp monthly increase in total construction activity, and the most marked since last October. According to respondents, strengthening customer demand was the main factor leading activity to rise, the bank added.

Housing activity continued to rise sharply, despite the rate of expansion easing from February. Meanwhile, activity on civil engineering projects continued to fall modestly.

Higher demand also reflected growth of new orders in March, with the sharp expansion at the end of the first quarter only slightly slower than that seen in February.

Simon Barry, chief economist for the Republic of Ireland at Ulster Bank, said: “There was a very sharp acceleration in commercial activity which took the Commercial PMI to its highest level since last October, in the process leaving commercial as the strongest performing activity category last month.

"Housing activity continues to expand at a very rapid rate, albeit that the pace of growth in residential activity eased modestly in March. Civil engineering remained an area of weakness, however, with respondents reporting a fifth consecutive decline in activity.”

Ulster Bank said with new projects getting under way, companies were increasing staff levels accordingly. Although easing to the slowest since September last year, the rate of job creation was substantial, the bank said.

Average vendor performance also declined during March, with the solid lengthening of lead times broadly in line with that seen in February. Panelists indicated that stock shortages at suppliers had been the cause of delivery delays.

Companies were again optimistic regarding the future prospects for activity, with improving economic conditions, stronger client demand and business expansion plans all mentioned.