The Irish construction sector displayed mixed results in October, with a significant boost in residential building offset by declines in other areas, resulting in a slight drop in overall activity. New order volumes fell for the first time in eight months, yet improved business sentiment encouraged firms to expand their workforce. Meanwhile, input costs remained high.
According to the seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index, the reading edged up to 49.4 in October from 49.0 in September. Despite this increase, the index remained below the 50.0 threshold, indicating a continued, albeit minor, contraction in activity for the second month in a row. The slowdown was more moderate compared to September's pace.
Different sectors within the construction industry showed contrasting trends. Residential construction stood out with robust growth, recording its fastest rate of expansion since May 2022. However, this was counterbalanced by a noticeable decline in commercial construction and a downturn in civil engineering projects.
Companies that experienced a dip in overall activity often attributed it to emerging signs of a market slowdown, which also contributed to the first drop in new business orders in eight months. Nonetheless, the reduction in new orders was relatively slight.
Despite these challenges, many construction firms expressed confidence in future growth. Business optimism was higher than the long-term average, with some companies expecting a recovery in new orders and continued demand in the housing market.
This positive outlook supported further job creation, marking the second consecutive month of employment growth at a level similar to that seen in September. Purchasing activity remained stable; while some firms increased their inventory levels, others reduced their procurement efforts after previous stockpiling.
Inflationary pressures persisted, with input costs continuing to rise at a significant pace, comparable to the series average. Supply chain disruptions also continued, as delivery times lengthened for the fifth consecutive month—the most significant delays since February. These were attributed to shortages of staff and materials at suppliers, with particular mention of delays from UK sources.
The use of subcontractors increased slightly, leading to a reduction in their availability. However, subcontractor quality saw an improvement for the first time since June 2020.
IRELAND'S CONSTRUCTION & ENGINEERING SECTORS' UPCOMING
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