Employment fell in the construction sector last month, ending a five-month period of jobs growth.
The AIB Ireland Construction PMI report in February shows staffing levels were scaled back midway through the opening quarter of the year.
It comes at a time when there are significant concerns over housing output, with CSO figures showing there was a drop in the completion of new homes last year.
Some construction companies reported that workers had moved on following the completion of projects, while builders continued to increase their usage of sub-contractors modestly.
Speaking on RTE’s Morning Ireland John Fahey, AIB Senior Economist said its “disappointing” that employment in the sector fell in February.
However he noted it’s just the first month after six months of expansions.
“When you look at the report overall, there’s some encouragement in it as well from a sector perspective.
“In the residential side, which obviously is reflective of housing market, activity remains the best performing of the three sectors and that’s been an expansion mode for the past six months and indeed in February, the reading was slightly quicker than January, so it does represent our employee quickening inactivity.
“Similarly too on the commercial side in terms of commercial real estate that returned to growth in February after contracting in January, so there was some positives when you delve into some of the details in relation to it.”
It was reported that input costs rose at the fastest pace in almost two years in February as suppliers hiked their charges.
One-third of respondents signalled a rise in input prices during the month, while sub-contractor rates also increased at a sharper pace in February.
Shortages of staff and materials at suppliers caused a build-up in their backlogs of work, in turn resulting in lengthening delivery times for construction firms.
The survey also found that lead time for the procurement and delivery of material to construction jobsites lengthened sharply, and to the greatest extent since January 2023.
Commenting further on the survey results, Mr Fahy said the survey for February showed that the sector remained in contractionary territory.
“The headline index printed at 48.7 last month. However, this was a slight improvement on the January reading of 48.2, which implies that the pace of decline in activity eased slightly in February. This is the fifth time in six months that the index has been below 50, highlighting the muted operating environment for building activity,” the economist said.
“Assessing activity levels from a sectoral perspective, residential was the best performing of the three sub sectors. This outperformance has been in place for six months now. Commercial activity returned to expansionary territory after falling in January. Meanwhile, civil engineering retained its position as the weakest of the three sectors, continuing to contract,” John Fahey said.
“There were some encouraging signs emanating from the new orders index, which is regarded as a key leading indicator. The index moved back up into growth territory having declined during a weather impacted January. Survey respondents noted improved demand and greater capacity as factors in the return to expansion in new orders.
“Firms in the construction sector remained optimistic on activity over the coming 12 months. Although, outlook expectations, as measured by the Future Activity index, weakened for a second month in-a-row and is now below its long run average. Some firms referenced uncertainty in relation to tariffs as a reason for the more cautious mood,” he added.
Article Source – Employment in construction down in February – RTE
