Construction sector continued its speedy recovery in July

The construction industry continued to expand quickly last month but builders were hampered by delivery delays due to Brexit and the pandemic while material costs also reached record highs in July, according to an index tracking activity in the sector. Most builders also expect the sector to remain buoyant into next year.

The Ulster Bank construction purchasing managers index (PMI) for July suggested the sector grew strongly last month although the pace of expansion was not as pronounced as the previous two months. Construction activity has ramped up at a fast pace since the sector effectively fully reopened in late spring as lockdown restrictions eased.

Housebuilding activity led the way in the sector in July, followed by commercial building and civil engineering activity. In its survey of purchasing managers as part of its the research, Ulster Bank found that three quarters of respondents saw their material costs increase in July.

More than half of all respondents predicted a rise in building activity over the coming year, Ulster Bank said.

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"Irish construction firms have made a very positive start to the second half of the year," said Simon Barry, the bank's chief economist for the Republic.

“The July results also captured a further strengthening of new business flows, with a rise in the new orders index pointing to a reacceleration in orders growth last month. Underpinned by the ongoing support from the loosening of restrictions and the associated boost to demand, firms reported further sizeable gains in employment levels, in the process marking the fourth month in a row of positive job creation.”

Mr Barry also noted the problems reported over delivery delays but he said confidence in the sector had still picked up from June and remains “well above its long-run average”.