The economic recovery in the sector gathered momentum in June, as activity increased at the second-fastest pace in the survey history. The growth of activity was supported by a strong rise in new business and improved market confidence. As a result, companies hired additional workers again, with the rate of job creation accelerating.
The Ulster Bank Construction Purchasing Managers’ Index (PMI) – a seasonally adjusted index designed to track changes in total construction activity – rose to 65.7 in June from 63.3 in the previous month, thereby pointing to a substantial increase in construction activity.
Simon Barry, chief economist Republic of Ireland at Ulster Bank, said: “The recovery in Irish construction gained further significant traction in June according to the latest results of the Ulster Bank Construction PMI survey. Building on the solid improvement registered in April and May, overall activity again accelerated sharply last month as the headline PMI rose to 65.7. This is the second-highest reading in the survey’s fifteen-year history, with the pace of growth in June bettered only by the record rate of growth recorded in November 2004.
“All three sub-sectors registered improvement last month suggesting the renewed pick up is broadly-based. Exceptionally strong performances were recorded in housing and commercial activity where in each case growth was close to the record rates seen in the second half of last year. More moderate growth was seen in civil engineering, though the June survey pointed to a third consecutive month of growth and the best performance since January. There was also a very strong improvement in new business levels which, combined with stronger activity trends generally, have underpinned another very solid month for employment where growth was as its fastest pace since last October.
“Overall, following a notable slowdown in the early months of the year, there has been a marked reacceleration in the pace of construction activity through the second quarter, thus offering considerable encouragement regarding the sector’s momentum as we enter the second half of the year.”
Respondents attributed rising activity to an increased number of projects and improving confidence within the economy.
Subcontractor usage rose at a sharper pace in June, contributing to a further decline in availability. Higher demand and lower supply of subcontractors meant that they were able to raise their prices at the fastest pace in the year-to-date, despite what was seen as a modest deterioration in the quality of their work.