Labour and materials continue to drive construction costs higher

February 14, 2024

Labour and raw material costs continue to drive pricing higher in the construction sector, new research has found.

The Construction Industry Federation Construction Outlook Survey for the first quarter of the year found two thirds of respondents saw labour costs rise year on year and 60% saw raw materials increase.

More than half of the 240 construction companies who took part said they expect the trend to continue this year.

Despite the cost pressures, 39% of those surveyed said turnover rose during the last three months of last year when compared to the same period in 2022.

While a third expect turnover to continue to climb this year.

This is leading to higher employment in the sector, with a quarter reporting an increase in the numbers they employ, and 29% saying they expect this trend to continue over the coming three months.

Increasing costs continue to impact the pricing on projects with just over half of respondents acknowledging a year on year increase in what they charge and 45% expecting continued increases in the first three months of this year.

However, access to skilled labour, securing a healthy profit margin and the increased cost of raw materials remain the three most significant challenges facing the industry.

“Overall construction investment in Ireland is forecast to increase by 4% in 2024,” said CIF Director General, Hubert Fitzpatrick.

“The residential, non-residential, and civil engineering sectors will continue to expand during 2024.”

“With a growing policy emphasis on sustainable infrastructure development, the civil engineering sector will continue to be the backbone of the wider construction sector with strong growth forecast through to 2026.”

But he added that with the economy now at full employment, it is more important than ever that policy continues to address the significant capacity constraints and deliverability issues, principally those in the planning and procurement systems.

“Enabling the construction sector to be at its most effective will assist other parts of the economy to function more productively.”

Article Source – Labour and materials continue to drive construction costs higher – RTE

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