Growth in the Irish construction sector accelerated in July amid reports of material shortages, which drove cost inflation.

The latest Ulster Bank Construction Purchasing Managers' Index for July also suggests new orders continued to increase at a substantial pace and companies raised employment and purchasing activity accordingly.

There was growth in all three sectors of construction, with housing activity particularly strong - however, output here is still below the level required to meet demand.

The index rose to 60.7 in July from 58.4 in June, a reading that signals a fifty-ninth consecutive monthly rise in construction activity, and one that was sharper than in the previous month.

Chief Economist with Ulster Bank Simon Barry said the activity growth "was broadly-based in July, with firms operating in Civil Engineering reporting a welcome return to expansion – perhaps linked to the recent marked step-up in the growth of Exchequer capital spending.

"But as has been the case for much of the construction recovery to date, Commercial and Housing activity remain the main sources of the sector’s growth," he added.

Mr Barry also said latest CSO figures show housing completions were up over 25% year-on-year in Q1 and "the encouraging signal from the more timely Housing PMI suggests that rapid growth in housing output has been sustained in the period since then".