Spike in new orders boosts construction activity

Activity in the construction sector is continuing to expand thanks to a spurt in new business.

The latest Ulster Bank construction purchasing managers' index (PMI) for October rose to 58.7, with the 50 line separating growth from contraction.

The report noted rising workloads were feeding through to increases in purchasing activity and employment, while sentiment around the prospects for future growth remained strongly positive.

Construction activity has risen continuously since September 2013.

Growth was reported across all three monitored categories – housing, commercial and civil engineering.

The strongest expansion was again registered on commercial activity, while housing activity rose sharply.

The latest barometer also recorded a faster increase in new orders. According to respondents, a greater availability of new work had been the key factor leading to an increase in activity.

Accelerating growth

New orders have increased for the 39 straight months in a row and the rate of growth quickened to the fastest since March.

"The sector's recovery continues to be underpinned by a greater availability of new work," Ulster Bank chief economist Simon Barry said.

“The health of the trends in new business offers much encouragement about the sector’s near-term prospects both in absolute terms and relative to other areas of the economy,” he said.

“Notably, the pick-up in the new orders index from already elevated levels is signalling acceleration in new business growth in the third quarter compared with the second,” Mr Barry said.

“This is a pattern which leaves construction-sector momentum looking stronger than both manufacturing and services as we enter the final quarter of the year, with recent PMIs from those sectors suggesting that Brexit impacts are weighing on activity trends in the more internationally-exposed areas of the economy,” he added.