Sharp gain in construction activity recorded in June

Sharp gain in construction activity recorded in June
Construction work on a student apartment development on the former Crow's Nest site at Carrigrohane Road/Victoria Cross in Cork. Picture: Larry Cummins

Construction activity in Ireland increased for the first time in four months according to the monthly Purchasing Managers’ Index (PMI) from Ulster Bank.

The seasonally adjusted index is designed to track changes in total construction activity and posted 51.9 in June, above the 50.0 no-change mark for the first time in four months. The reading was up substantially from 19.9 in May. Index readings above 50 signal an increase in activity on the previous month and readings below 50 signal a decrease.

Within the index, the housing construction sector saw the largest increase at 55.8 while the commercial sector also recorded an increase in activity at 50.9.

The Civil Engineering sector remained on a downward trend recording 43.4 on the index but up significantly on previous months.

Simon Barry, Chief Economist at Ulster Bank said: "All three sectoral sub-indices recorded sharp gains last month. This was particularly so in the case of housing as its PMI rose from 21.4 in May to a ten-month high of 55.8 in June, signalling a fast expansion in activity following the extreme weakness reported in recent months."

"Overall, the June PMI is an encouraging sign that the construction sector is now more clearly in recovery mode following the easing of restrictions which took hold during May."

"Other details within the survey also offered some encouragement, with the New Orders and Employment indices both recording sharp trajectory improvement last month to stand at 46 and 43.3 in June, respectively. So while new business and employment both remained in contraction territory in June, we wouldn’t be surprised if these indicators return to outright expansion in the months ahead," Mr Barry said.

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