Construction sector continues strong start to the year

The Irish construction sector’s strong start to the year continues, with the latest Ulster Bank construction purchasing managers’ index (PMI) showing a sharp increase in activity and new orders, and a faster pace of job creation.

The sector is benefiting from a pick-up in housebuilding in urban areas, including Dublin, where demand for homes outstrips supply.

While the latest PMI eased back from an eight-month high in January to 59.2 last month, it was still well above the 50 mark that separates expansion from contraction.

Activity has now risen continuously for the past 4½ years. The latest expansion was linked by panellists to improving market conditions generally and greater client activity.

The latest PMI recorded the fastest increase in employment for six months with firms responding to rising workloads by taking on extra staff.

All three categories of construction covered by the survey recorded increases in activity in February. The swiftest expansion was in the area of housing projects, where the rate of growth quickened for the fourth consecutive month. Commercial activity was also up, while a more modest increase was seen for civil engineering sector.

“Building on the very positive start to the year noted in last month’s report, the February results of the Ulster Bank Construction PMI survey indicate that Irish construction firms continue to report very rapid expansion,” Ulster Bank chief economist Simon Barry said.

“Particularly encouraging was a further acceleration in housing activity where growth picked up to a 10-month high, leaving it as the strongest performing subsector last month,” he said.

“Growth in commercial activity was also very strong, albeit that the pace of expansion eased slightly in February. And civil engineering recorded a welcome third consecutive month of expansion, though the pace of growth was more modest than in the other sub-sectors.

“The February results mark 4½ years of continuous expansion among Irish construction firms, and forward-looking elements of the survey suggest that near-term prospects remain positive,” he added.