Total construction activity rose at its fastest pace in almost a decade and at the second quickest rate in the 14-year history of the Ulster Bank Construction Purchasing Managers’ Index (PMI).
The latest PMI shows near-record rises in activity, new orders and employment in October as the sector continued its recovery from the low ebb of the past few years.
Commenting on the results of the index, Ulster Bank Ireland chief economist, Simon Barry said it appeared the sector’s recovery was strengthening and reaching across a wider section of the industry.
Overall, the index rose from 61.5 in September to 64.9 last month with commercial activity expanding at a strong pace from 62.7 to 66.8 and the civil engineering facet of the index rising from 45.1 to 50.6.
“The headline PMI index rose again last month, reaching the second highest level in the survey’s 14-year history — the latest sign that the recovery in the sector is continuing to strengthen, albeit from very low levels of activity.
“Both housing and commercial activity registered another month of particularly rapid rises, with the latter posting its strongest gain in over nine years. And a return to marginally positive growth in civil engineering meant that survey respondents are reporting a broadening, as well as strengthening, of the sector’s recovery dynamic,” said Mr Barry.
The rise in activity in the commercial sector was the strongest recorded since September 2005 while the marginal growth in civil engineering activity is seen as another positive sign.
Employment numbers also saw a significant increase last month — one of the sharpest in the history of the survey— with close to a third of firms taking on new employees in October.
Sub-contractor use also rose for the eighth consecutive month, and at a solid pace that was sharper than that seen in September. However, the number of sub-contractors declined sharply again last month with many respondents attributing it to a lengthening of suppliers’ delivery times.
On the cost front, a further marked rise in input prices was registered while optimism remained strong both in relation to the construction industry and economy as a whole.
Mr Barry said firms “remained upbeat” about prospects for the future .
“In the near-term, activity in the months ahead will be underpinned by buoyant flows of new business, with the new orders index reaching a 10-year high last month.
“The sustained increases in both activity and orders continue to promote favourable trends in staffing levels, with the employment index also hitting a 10-year high in the latest survey as the pace of hiring increased further. Moreover, confidence about the construction outlook over the coming 12 months also remains elevated with sentiment close to record highs again last month, partly reflecting optimism surrounding the wider Irish economy,” added Mr Barry.
The rate of expansion in new orders accelerated for the second month running and was the strongest since October 2004 with panellists reporting ongoing increases in enquiry numbers.
The industry achieved a full-year of consecutive growth in August when strong levels of new orders helped complete a 12–month period of expansion, according to the PMI. .
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