Construction sector books growth in activity for June

Firms in the Irish construction sector have recorded growth in construction activity again in June, continuing an almost three years of monthly increases.

According to the Ulster Bank construction purchasing manager's index, the rate of expansion was strong. The index, which is a seasonally adjusted index designed to measure the overall performance of the construction economy, registered 58.5 up from 58.1 in May.

The index was broadly in line with the average for the current expansionary period, and firms widely linked activity growth to higher new order levels.

Ulster Bank economist Pat McArdle said that overall confidence remains high and the construction sector continues to grow strongly with increased civil activity compensating for the lower rates of expansion in both housing and commercial building.

"The Irish economy is driven by construction but construction in turn is increasingly propelled by civil engineering. Civil, the weakest of the three construction sub-secors since 2001, had the strongest reading in the first half of 2006," Mr McArdle said.

"While the exchequer spending data showed a modest undershoot at the end of June, the sector is clearly being sustained by Government spending to a much greater extent that formerly," he added.

On the flip side Ulster Bank said that housing, which usually vies with commercial for pole position, was the weakest in both June and in the first six months. It continues to expand, but at a pace slightly below that of the past two years, according to the index.

The index also records that the rate of job creation remains robust. "Higher new work volumes contributed to a robust rate of job creation in the Irish construction sector in June. Firms also reported that staff were hired to progress work on existing projects," Mr McArdle said. Employment has now increased in each month since September.

The degree of confidence of Irish construction regarding the outlook for activity growth remained high in June. Firms cited the recent positive trend in order books as a reason for optimism.