The construction sector remains firmly in expansion territory, and is recording growth that is close to that seen in the years immediately prior to the recession, a new survey shows.
New-order growth in the sector accelerated last month, helping to support a further rise in activity and a stronger rate of job creation, the latest reading of the monthly Ulster Bank Construction Purchasing Managers’ Index (PMI) shows.
Despite this, the rate of expansion was the weakest since January, with the PMI dropping to 56.6 in July versus 58.2 a month earlier.
Housebuilding outpaced commercial construction during July as civil engineering activity decreased for the second month in a row, and at a faster pace than in June.
New business rose substantially last month, with survey respondents mentioning a greater availability of projects and increased market confidence.
“Firms reported another substantial increase in new business flows, reflecting a greater availability of projects – a signal that offers considerable encouragement regarding the health of the sector’s near-term outlook,” said Ulster Bank chief economist Simon Barry.
Optimism dipped to a five-month low, but remained relatively strong as just over half of survey respondents forecast an increase in activity over the coming 12 months.
Extra staff
The rate of job creation gathered pace during July as businesses took on extra staff in response to higher workloads. As well as raising staffing levels, companies in the sector expanded their purchasing activity in line with higher workloads, while input-buying also increased sharply, albeit at a reduced pace.
Mr Barry said there were further signs of capacity pressures in supply chains last month, with lead times on the delivery of inputs lengthened to the greatest extent since December 2005.
Panellists linked longer delivery times to stronger demand for inputs and stock shortages at suppliers.
Material shortages also acted to push up prices for inputs, with cost inflation recorded for the 47th month in succession.
