April saw a sharp increase in construction activity compared to March as some Covid-19 restrictions eased, according to the latest Construction Purchasing Mangers Index from Ulster Bank.

The Construction PMI, which tracks changes in total construction activity, rose to 49.3 in April - a four month high and up sharply from the reading of 30.9 in March.

It was also only just below the 50 no-change mark.

April saw a return to expansion in residential activity, with the housing index rising to its highest level so far this year.

But Covid-19 measures continued to cause declines in activity at other firms, with commercial work still restricted in April.

Ulster Bank noted that looser restrictions and higher new orders led construction firms to take on extra staff, with job creation recorded for the first time so far this year.

Purchasing activity also stabilised after sharp falls over the first three months of the year. Where input buying increased, companies linked this to the reopening of residential sites.

But construction firms continued to face severe supply-chain disruption when purchasing inputs.

The latest substantial lengthening of lead times reflected the Covid-19 pandemic, as well as Brexit and global shipping issues such as the blockage of the Suez Canal.

These supply issues resulted in a further acceleration of the rate of input cost inflation and Ulster Bank said the latest increase in input prices was the fastest since July 2004, and among the strongest in the survey's history.

Higher shipping costs and rises in prices for items such as steel and timber were reported, it added.

Ulster Bank said that business confidence was unchanged from the two-and-a-half year high posted in March.

A further loosening of Covid-19 restrictions and release of more pent-up demand is predicted to support growth of activity over the coming year, with more than 58% of respondents expressing a positive outlook, it added.

Simon Barry, chief economist at Ulster Bank, said today's survey provided a number of encouraging signals on the performance of Irish construction firms at the start of the second quarter.

"Offering particular encouragement was a very welcome return to expansion in residential activity, with the Housing PMI rising to its highest level so far this year. The easing of restrictions on housing construction which took effect last month has clearly unleashed a return to more positive activity trends in a key area," Mr Barry said.

He noted that housing was the only sub-sector to experience a return to growth last month, butt the pace of decline eased notably in both commercial and civil engineering.

"Looking ahead, this month's keenly-awaited reopening of the wider sector, underpinned by a sizeable expansion in overall new business flows in April, should promote a broader strengthening of the overall sector's activity trends beyond housing," Mr Barry said.

"Indeed, firms remain highly confident about prospects for the coming year, with almost 60% of respondents continuing to expect that activity will rise in the coming 12 months, helped by the lifting of Covid-19 restrictions and the release of more pent-up demand," he stated.

"While the improving outlook is certainly very welcome, one note of caution came in the form of a further acceleration in the rate of input cost inflation. This now stands at a near 17-year high, in part reflecting adverse supply chain impacts from Brexit, the pandemic and the recent blockage of the Suez Canal," he added.