New projects and State spending on infrastructure drove continued expansion and jobs growth in the Republic's building industry last month, the latest figures show.
The Ulster Bank Construction Purchasing Managers' Index (PMI), released today, says that the sector expanded more rapidly in May than in the previous two months.
The overall index returned a figure of 58.1 in May. The index is benchmarked at 50, with any figure above this indicating growth on the previous month, and any figure below indicating a contraction.
The 58.1 recorded in May compared favourably with the 57.2 figure posted in April.
The continued expansion sparked a sharp increase in demand for workers. Employment growth in the industry during May was at its strongest since January 2005, with 28 per cent of building companies taking on new staff.
The PMI shows that employment has grown in the sector for 33 months on the trot. However, the index indicates that the rate of expansion in job creation may not last, as the speed at which projects are being completed has increased, and this will slow labour demand.
Over 27 per cent of companies surveyed indicated that activity had increased during May, while only 9 per cent noted a decline. The survey states that anecdotal evidence points to new business as the source of the growth.
Ulster Bank chief economist, Pat McArdle, says in the report that Exchequer spending on big civil engineering projects like road building is contributing to the growth.
"To date in 2006, civil engineering has expanded at a pace that is faster than in any of the preceding five years," he says.
"The May index of civil activity was the lowest this year and tallies with Exchequer spending, which also slowed in May; however, we expect this to be temporary."
The index reading for civil engineering was 56.5 in May as against 58.7 in April.
The commercial sector - offices, shops and factories - was the month's star performer, with a reading of 58.5 in May from an April figure of 55.5. Mr McArdle says that, overall, this part of the industry is expanding at a slower pace than in recent years.
The rate of growth in house building slowed slightly to 56.4 in May from 56.6 in April.
But the expansion is continuing to force up the price of materials and services. More than one in three companies surveyed said the rate of inflation in these costs remained sharp in May, with steel and fuel causing particular concern.
Overall, builders are optimistic about their prospects over the next 12 months. Confidence in the sector is strong, with new orders helping to underpin business expansion plans for the coming year.
