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Mon March 08 2021

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Subbies in short supply as Irish recovery gathers pace

11 Aug 14 The Irish construction sector has experienced the fastest rise in new orders since November 2004 and sub-contractors are now in short supply.

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The pace of job creation also picked up as the rate of recovery gathered pace in July, according to the latest Ulster Bank Construction Purchasing Managers’ Index (PMI). The seasonally adjusted index, which is designed to track changes in total construction activity, rose to 62.6 in July from 59.9 in 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.

Sub-contractor usage rose at a substantial pace in July, and one that was the fastest since February 2006. This contributed to a solid reduction in their availability, which meant that sub-contractors were able to increase their charges despite a perceived reduction in the quality of their work. In fact, the rates charged by sub-contractors increased at the sharpest pace since November 2004.

Simon Barry, chief economist Republic of Ireland at Ulster Bank, said: “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. The July results marked the eleventh consecutive month of expansion among Irish construction firms – an important indication that a sustained recovery is taking hold.

“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 foll owing 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 so lid basis for expecting that overall activity levels should continue to expand solidly in the months ahead."

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Strong growth was recorded with respect to housing and commercial activity in July. Moreover, the rate of expansion in activity on residential projects was the sharpest in the history of the survey which began in June 2000. Although civil engineering activity continued to decrease, the rate of contraction was only marginal and the slowest in the current sequence of decline.

A rise in demand for inputs enabled suppliers to increase their prices. The rate of cost inflation quickened to the fastest since March 2012. Suppliers’ delivery times meanwhile lengthened for the thirty seventh successive month. 

Optimism among construction firms improved for the second month running as rising enquiry numbers encouraged firms to predict further increases in activity over the coming year. Particular strength was expected in the housing and commercial sectors.

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