Homebuilding growth slows as supply disruptions start to bite

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Growth in housing construction activity slowed further last month, despite continued overall growth in the construction sector.

The Ulster Bank’s monthly construction index rose to 56.9 points in October from 56.3 in September.

While October’s rise in activity was the smallest since April, the reading is still well above the 50 neutral points that separate an industry in growth mode from one in decline.

Growth was driven by a strong and accelerated increase in commercial construction projects; with a decline in civil engineering works and a continued slowdown in the pace of growth in housing activity.

Construction business confidence improved on the back of a further increase in construction activity and new orders last month.

New deal flow has now increased in each of the past seven months as the release of pent-up demand continues.

Construction companies said they accelerated their rate of hiring staff last month in response to the increase in general activity levels.

Confidence levels are high, with some companies expecting a further release of pent-up demand over the coming year.

“Commercial activity was particularly strong in October as the pace of growth accelerated markedly, while residential activity recorded a solid expansion last month, albeit at a reduced pace compared to September.” said Simon Barry, chief economist at Ulster Bank in Ireland.

However, Mr Barry said supply chain disruptions remained a very problematic headwind for construction companies.

“Respondents cited Brexit, Covid disruption and shortages of delivery drivers and materials as factors contributing to record lengthening delivery times and record growth in input costs,” it said. -he declares.

“Nevertheless, despite these headwinds, companies remain confident about the 12-month outlook,” he said.

“Sentiment rose from September and again rose above long-term average levels, reflecting expectations that the continued release of pent-up demand will continue to support growth in activity in the year ahead. “said Mr. Barry.

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