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Construction growth raises building costs

Ireland’s construction sector is now growing so fast that shortages of some building materials and services are being reported.

That’s led to higher prices for steel, insulation and transport.

The latest Ulster Bank Construction Purchasing Managers’ Index (PMI), which tracks the country’s building activity, rose to 60.7 in July from 58.4 in June. Any reading above 50 indicates expansion, any figure below, contraction.

The survey’s participants noted housing construction is now particularly strong, albeit still well below levels needed to meet demand.

However, the PMI for housebuilding specifically hit 63.9 in July. That’s one of the sector’s highest readings in the survey’s 18-year history.

The latest data from the Central Statistics Office shows that the number of house completions hit 3,525 in the first quarter of 2018, up 26.9pc year-on-year.

Activity in the commercial sector – which includes offices and warehouses, for example – increased sharply last month compared to June, according to the latest figures.

The civil engineering sector also returned to growth after two consecutive months of decline.

“Firms continue to benefit from sharp rises in incoming new business flows as they report ongoing improvement in client demand for their services,” said Simon Barry, chief economist for the Republic of Ireland with Ulster Bank.

“In turn, the buoyancy of activity and orders patterns continues to underpin strong demand for construction workers, with the pace of job creation remaining substantial in July, albeit not quite as exceptionally strong as June,” he added.

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