The Irish construction industry is running at around three quarters of its capacity on average at present, despite the strong demand for new housing and infrastructure.
That’s according to the latest Construction Market Overview from building services firm Turner & Townsend, covering the period from July to September.
Overall 78% of respondents said the construction market stayed the same during the three months, with 11% describing it as cooling.
Just 11% thought the sector warmed, the report shows.
“This disparity between demand and capacity reflects the ongoing impacts of COVID-19 and subsequent geopolitical events, particularly the significant loss of skilled labour that has yet to fully return to the market,” the report states.
“These workforce challenges, combined with ongoing material cost pressures, point to significant structural inefficiencies hindering growth.”
The top performing sector remains housing, the analysis finds, with private sector housing delivery stronger than output for the public sector.
However, problems accessing skilled labour in particular prompted two thirds of respondents to say programme lengths had increased.
Government red tape was also cited by many as an issue.
Costs also remain a key problem for the sector, with concrete 9% higher in the quarter.
“Access to labour and skills issues remain a critical challenge for the industry, driving up costs and extending project timelines, with construction labour costs rising by at least 5%,” the report claims.
Overall 67% said there had been a marginal increase in material costs over the last three months.
Contractors said they expect tender price inflation of 3.3% this year, followed by 3.6% next year and 2.8% the following year.
On average contractors said their order books are 76% full for this year into next and 44% for 2025-2026.
“Looking forward, addressing labour shortages, streamlining processes, embracing sustainability and adapting to market shifts will be critical for the industry,” the report concludes.
Article Source – Building sector running at 77% capacity despite demands – RTE
