Building growth at six-month high

The construction sector enjoyed another strong month in April, with building activity accelerating for the third consecutive month and showing the sharpest monthly increase since October.

The latest edition of Ulster Bank’s construction purchasing managers’ index (PMI) — widely seen as the chief health barometer for the sector — shows a 61.3 point reading for April; up from 60.8 in March. Any reading above the neutral 50 point mark represents a sector in growth mode.

April’s growth was driven by housebuilding work, but commercial and civil engineering activity also rose. New business orders and staff hiring levels expanded at sharper rates than previous months and overall rising activity levels led building firms to increase their own purchasing at the fastest pace on record.

“The April results included evidence of broad-based expansion in the sector, as all three sub-sectors posted increases in activity,” said Simon Barry, Ulster Bank’s chief economist for the Republic.

He added: “Civil engineering saw a welcome return to growth last month, interupting a five-month sequence of declines in activity. Commercial activity also expanded at a very rapid rate, albeit the pace of growth slightly eased in April.

Residential construction remains an area of particular strength with housing activity accelerating further to become the strongest activity category in April. “Survey respondents reported strong momentum in the housing sector, along with improving economic conditions more generally, are likely to sustain favourable dynamics in construction activity over the coming 12 months,” Mr Barry said. Indeed, sentiment levels amongst construction firms improved last month. Nearly 60% of respondents predicted a rise in construction activity over the coming year. The further rise in employment levels meant hiring has increased for 44 straight months.

Meanwhile, while the rate of input cost inflation eased in April, it remained substantial and above average with a number of respondents reporting higher prices for aluminium, copper and steel.


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