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Building index up as new orders flood in

Monday, August 11 10:10:42

July saw the latest Ulster Bank construction purchasing managers index rise for the 11th straight month as the level of new orders rose significantly.

The index, a measure of activity in the sector, rose to 62.6 in July from 59.9 the previous month.

Total activity has now increased in each of the past 11 months with panellists linking the latest rise to higher new orders, and in some cases the release of projects that had previously been on hold.

The index shows strong growth was seen in the housing and commercial sectors. It noted that the rate of expansion in activity on residential projects was the sharpest in the history of the index, which began in 2000.

Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, noted that the Irish construction sector has made a strong start to the third quarter, according to the results of the latest Ulster Bank Construction PMI survey. Overall activity increased sharply in July, with the rate of growth quickening to its fastest in three months.

"Housing was a particular bright spot as a further strong acceleration in activity last month took the rate of growth to the fastest in the survey's 15 year-history. It is important to recognise that levels of residential activity remain extremely low following the huge correction which took place over 2007-2013. Nonetheless, the evidence provided by the PMI and indeed other data sources, including Department of Environment figures on house completions indicates that housing activity trends are clearly on an improving trajectory. Also offering considerable encouragement was the strength of new business flows reported by respondents last month. The rate of growth of new orders picked up markedly to the strongest since November 2004, thus providing a solid basis for expecting that overall activity levels should continue to expand solidly in the months ahead," he said.

The construction sector also saw a rise in employment levels - the 11th increase in as many months and the strongest in three months. Ulster Bank noted that the use of sub-contractors rose at the fastest level since 2006.

Optimism among building firms improved for the second month in a row in July, as more enquiries from people encouraged firms to predict further increases in activity over the rest of the year.