House-building activity grew at its fastest rate in at least 14 years last month, according to the latest indicator for the industry.

The Ulster Bank Construction Purchasing Managers' Index reveals that the pace of new homes being built was the fastest since the bank began the index in 2000.

The index showed a reading of 61.5 for September, broadly unchanged from the reading of 61.4 in August. It marked the 13th month in a row of gains.

Today's index also showed that new business and employment both rose at sharper levels than in August, while the sentiment for the sector also remained strongly positive.

Ulster Bank noted that the rate of job creation last month was much faster than seen in the previous month and the strongest since April.

Companies in the sector also said that they increased their usage of sub-contractors in September, the seventh successive month of increase.

However, the availability of sub-contractors declined to the greatest extent for 14 years and shortages in the supply of sub-contractors enabled them to raise their rates at the strongest pace since 2004. 

Ulster Bank said the rise in total activity was partly driven by strong growth in activity on housing projects. Commercial activity also rose at a sharp pace in September, but activity in the civil engineering sector continued to decrease, and at a faster pace than the previous month.

Simon Barry, Ulster Bank's chief economist, said that the recovery in the Irish construction continues to gain strength.

"Of particular note in the latest results is the fastest rise in housing activity in the survey’s 14-year history - an encouraging sign that sustained, and badly-needed, increases in residential activity are now taking hold," Mr Barry said.   

The economist said that further "very solid gains" in overall activity seem likely in the months ahead judging by another very strong reading in the new orders index, with almost half of respondents reporting that new business levels rose last month.