Housing activity only 'relative bright spot' for Covid-hit construction in October

A number of respondents to an Ulster Bank survey indicated that demand had improved over the course of the month, leading them to increase their activity.

Leading economists have warned that Covid-19-disrupted housing supply will have implications for homelessness, the cost of rents, and house prices for many years to come'. Picture: Larry Cummins

Housing output was "a relative bright spot" in October for the construction industry which continues to be hit hard by the Covid-19 crisis, the latest monthly snapshot of the industry suggests. 

The Ulster Bank construction survey involves a survey of purchasing managers across the whole industry who work in residential buildings, commercial construction such as office buildings, and civil engineering. 

Its overall index which measures total activity across the three parts of the industry, contracted in October, although at a slower pace than in September, while activity levels in housing steadied compared with September.  

"A number of respondents indicated that demand had improved over the course of the month, leading them to increase their activity. That said, this was outweighed by ongoing reports of disruption caused by the Covid-19 pandemic," Ulster Bank said. 

The index of housing output is closely watched, in particular, because of the huge shortfall of new housing caused by the closure of building sites during the first major lockdown in the sping.

After contracting in September, housing output stabilised in October, at a reading of 50.3. A reading below 50 means that activity has contracted further, while a reading above 50 points to activity expanding in the month.                 

Covid-19-disrupted housing supply will have implications for homelessness, the cost of rents, and house prices for many years to come, leading economists including those from the Economic and Social Research Institute have repeatedly warned. 

"While the October results contained reports of improving demand among some firms, such reports were not widespread enough to avoid another sub-50 reading for the headline PMI which continues to indicate that more firms are reporting declining rather than increasing activity levels," said Simon Barry, who is chief economist at Ulster Bank in the Republic. 

"The latest results also again highlight that Covid-19 continues to disrupt construction supply chains, with supplier delivery times lengthening further last month amid reports of shortages of, and higher prices for, raw materials," Mr Barry said.