Housing sector

Housing sector drives surge in post-Covid construction sector

Construction activity continued to grow at a rapid pace in June following the easing of restrictions, according to the latest Purchasing Managers’ Index (PMI) for the Ulster Bank sector.

The seasonally adjusted index remained well above the 50 mark which signals the sector is expanding – posting a reading of 65 after 66.4 the previous month – as activity increased for the second consecutive month after the complete reopening of the sector.

“Activity rose again at an exceptionally strong pace in June, with the headline PMI at one of the highest levels in survey history for the second consecutive month, although down slightly from compared to May,” said Simon Barry, chief economist at Ulster Bank in the Republic of Ireland.

While growth was recorded in the trade and civil engineering sectors, it was “particularly rapid” for residential housing last month, with the sector‘s rebound following a record pace of recovery in May.

Mr Barry said strong momentum was also evident in new deal flow, despite slowing from a survey record in May, with the sector experiencing a robust recovery in orders and activity which has supported further increases in the workforce in industry.

“Employment rose for the third month in a row as respondents linked strong job gains to improving customer demand, he said.

Businesses remained optimistic about continued growth in activity over the coming year, as demand is expected to continue to grow as the economy reopens.

Input costs

But while signals of continued strength in activity were “certainly encouraging”, Mr Barry warned of input cost inflation, which accelerated to a second consecutive record high.

Three quarters of all respondents indicated that their costs had increased over the month and that steel was the item whose price had risen most often.

“Results from the June survey underscore that the sector continues to face significant supply chain and cost challenges related to Brexit, Covid and global sourcing and shipping issues” , did he declare.

Lead times from suppliers continued to lengthen dramatically, with a rate of deterioration much faster than anything seen before the pandemic.

Global raw material supply and shipping issues have contributed to longer lead times, with Brexit also a factor, survey respondents reported.