Residential and commercial construction in the Republic of Ireland continues to see sharp increases in activity, according to the latest purchasing managers’ index (PMI) by Ulster Bank.

Although the growth rate in the bank’s PMI moderated to 58.9, it is still considered as a good number that is well above 50, which is a line that determines the separation of growth from contraction in the midst of positive job creation rates and a faster expansion of new orders.

Generally, construction activity in the housing and commercial sectors has moved up over the past 40 months, with growth rate marginally faster in the latter. Increasing workloads have also led construction companies to up their recruitment at the end of 2016. On the contrary, activity in civil engineering, which saw its fastest pace in April 2014, has slowed down.

But even with the increase in construction activity, the number of new housing units does not suffice the requirement to meet the high demand. This means that the industry can expect inflation to occur at a certain point in the future. Commenting on the overall scenario of the industry, Ulster Bank chief economist, Simon Barry, said:

“Overall, the December survey results round off another strong year of recovery for Irish construction firms, with the PMI consistently pointing to ongoing healthy expansion throughout 2016.

“Moreover, momentum behind the sector’s recovery continues to look encouragingly solid, with a marked pick-up in new orders in December indicating that activity trends look set to remain positive in early 2017.”

Barry also added that construction firms in the country remained highly optimistic about 2017, with more than 50% of them expecting further growth in the next 12 months.