A rise in the volume of new orders lifted the Irish construction sector in August, with new business helping boost purchasing activity and employment among building firms.

The rate of input cost inflation also quickened to the highest point in a year, with prices rising for a range of raw materials, according to Ulster Bank’s purchasing managers’ index (PMI) for the sector, which has been undergoing a “sustained uplift” over the past three years.

The seasonally adjusted index posted a reading of 58.4 in August, coming in comfortably above the 50 threshold that signals an expansion.

Expansion

However, it was down from a reading of 61 in July, which points to a weaker pace of expansion than in the previous month.

Simon Barry, Ulster Bank's chief economist for the Republic, described the latest findings as "a further solid rise in activity" at Irish construction firms and noted that August marked the 36th consecutive month of expansion in the industry.

Commercial activity was again the best-performing subsector, despite some easing in growth compared with July. Housing activity was also “a particular source of strength” in August, with expansion in residential activity increasing to the fastest pace since March.

Civil engineering continues to lag behind the other sectors, with activity in this often-volatile sector recording a decline in August, bucking an 11-month trend of gains.

Brexit

Almost 60 per cent of respondents to the PMI survey expected no impact from the Brexit referendum result on their activity over the coming year, while broadly similar proportions of companies expected activity to be boosted or reduced.

Sentiment among construction businesses rose strongly in August to stand at one of the highest readings in the survey’s 16-year history.

“It is clear that Irish construction firms remain bullish on the outlook for their own sector,” Mr Barry said.