Ireland’s building industry expanded last month for the first time since the country’s 2007 property market collapse as home construction increased, Ulster Bank said.
The bank’s purchasing managers index for construction rose to 55.7 in September from 49.7 in August, the highest level since May 2007, the Royal Bank of Scotland Group Plc unit said in a report published today. A reading below 50 indicates contraction.
The increase is a sign that the Irish economy is recovering from the worst property market crash in western Europe. The country plunged into recession during the financial crisis as house prices plummeted and unemployment soared. The boost in homebuilding adds to reports of rising consumer confidence and employment in September.
“They are all signs of an improving economy,” said Alan McQuaid, an analyst with Merrion Capital in Dublin. “The construction sector appears to be on the mend.”
Some parts of the country have housing shortages, especially Dublin, which is contributing to the building increase, according to Conall MacCoille, an analyst with brokerage firm Davy. Housing starts are “well below sustainable rates,” he said by e-mail.
Homebuilding rose to 59.5 from 53.8 on the index and commercial construction increased to 56.1 from 51, Ulster Bank said.
“Housing was again the strongest sub-sector, as activity expanded at its fastest pace since December 2005,” Simon Barry, the bank’s chief economist for the Republic of Ireland, said in an e-mailed statement. Optimism for the next 12-month period was the strongest since January 2004, he said.
Home prices in Dublin jumped in August by the most in more than six years on an annual basis, Ireland’s central statistics office said last month. Prices fell 2.6 percent in the rest of Ireland, the CSO said.