Total activity in the construction sector fell in October, despite strong growth in housing.
The BNP Paribas Real Estate Ireland Construction Total Activity Index rose slightly from 49 in September to 49.4 last month.
However, the index was still below the 50 mark which indicates growth.
This is the second month in a row in which construction activity dropped.
On a more positive note, today’s data shows that housing activity increased sharply in October.
The rate of expansion increased to the fastest since May 2022.
John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland said the surge in residential construction is the big take-away from October’s PMI.
“After contracting continuously through 2023, the housing sub-index has now been stable or rising for the last nine months. However the rate of expansion accelerated sharply in October.
“Deadlines to avail of the development levy waiver and the water connection charge refund drove sharp spikes in the number of commencement notices filed in April and September respectively.
“But a condition of these incentives is that units must be completed before end-2026. So, with the paperwork done, developers are now getting on with the actual construction,” Mr McCartney explained.
On the other hand, commercial activity dropped solidly last month.
“The tapering-off of commercial activity is also welcome, as it reflects a slowdown in office building,” Mr McCartney said.
“Dublin’s office market is now amply supplied and, although a significant quantity of new space is still winding its way to completion, new starts have dried up.
“This will help to limit further vacancy increases, allowing demand to catch-up in time,” he added.
Today’s report shows that input costs continued to increase sharply in October, with the pace of inflation ticking up and coming in broadly in line with the series average.
Despite slight reductions in both activity and new orders, companies were increasingly confident that construction output will rise over the coming year.
Sentiment was slightly stronger than the series average, with some respondents predicting a renewed increase in new orders, while others highlighted confidence in demand for housing.
According to the report, confidence that workloads would increase in the future supported ongoing hiring in the construction sector at the start of the final quarter of the year.
Employment rose for the second month running, and at a modest pace that was broadly in line with that seen in September.
Article Source – Total construction activity falls despite strong growth in housing – RTE
