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The Importance of Building on a Good Start
Since the reopening of non-essential construction sites two months ago, the Townmore team has been busy. Work is progressing well onsite at our €5.7 million social housing development, Aherlow Meadow, in Tipperary Town. This project involves the delivery of 28 houses together with all associated site development works, open spaces and landscaping. You can read more about this here: http://test.townmore.ie/news/townmore-delivering-social-housing-for-tipperary/
Also, in addition to ongoing projects around the country, we were delighted to commence works on a new 30,000 square foot Primary Care Centre in Cobh, Co. Cork. Upon completion, this will be the fourth Primary Care Centre delivered by Townmore. This project comprises the partial demolition of an existing building to accommodate the provision of GP Suites, Treatment Rooms, HSE Accommodation and ancillary medical unit. Further works include the upgrade to the existing retail centre and associated site works. You can read more here: http://test.townmore.ie/news/building-change-a-new-primary-care-centre-for-cobh/
While this level of activity is great for Townmore, it is just as important to see this trend reflected across the industry. We are starting to see signs of this, but it is not all good news.
Earlier this week it was reported that the Ulster Bank Construction Purchasing Managers’ Index posted 51.9 for June. Crucially, this figure is above the 50.0 no-change mark. The index reading was up substantially from 19.9 in May. Anything below 50 signifies a contraction for the industry. This is the first time in four months that any growth in construction activity has been recorded, and it is a welcome end to the second quarter of what has been an incredibly challenging year.
Commenting on the survey, Simon Barry, Chief Economist Republic of Ireland at Ulster Bank, noted that:
“The latest results of the Ulster Bank Construction PMI survey signalled a welcome return to expansion in Irish construction activity in June. Notably, the headline PMI index rose sharply last month to get back to above the 50 breakeven level for the first time since the coronavirus hit the Irish economy. Mirroring the pattern of the headline PMI, all three sectoral sub-indices recorded sharp gains last month. This was particularly so in the case of housing as its PMI rose from 21.4 in May to a ten-month high of 55.8 in June, signalling a fast expansion in activity following the extreme weakness reported in recent months. Commercial activity has also returned to positive growth in June as a marked improvement in survey responses left the Commercial PMI reading at a four-month high of 50.9.
Overall, the June PMI is an encouraging sign that the construction sector is now more clearly in recovery mode following the easing of restrictions which took hold during May. Furthermore, a headline reading of 51.9 also signals construction outperformance relative to both the services and manufacturing equivalents (which stand at 39.7 and 51 respectively). And other details within the survey also offered some encouragement, with the New Orders and Employment indices both recording sharp trajectory improvement last month to stand at 46 and 43.3 in June, respectively. So while new business and employment both remained in contraction territory in June, we wouldn’t be surprised if these indicators return to outright expansion in the months ahead as confidence among construction firms about the coming year also continues to rise. Indeed, firms reported a positive year-ahead outlook for the first time in four months as over 39% of respondents anticipate higher output levels in the coming 12 months – a notable improvement from the recent low point in March when activity expansion was expected by fewer than 17% of firms.”
While both housing and commercial construction saw expansion for the month of June, civil engineering activity decreased slightly and levels of new business fell for the fourth consecutive month.
With the recovery – just like on any project – a good start is important, but so too is what comes next. The industry, facilitated by smart policy-making from our new government, needs to build on this solid start. The next few months will tell a lot.
