Construction activity returned to growth in March

April 16, 2024

Construction activity rose in March for the first month since June of last year and at the most marked rate for nearly two years, new data shows.

The BNP Paribas Real Estate Ireland Construction Index hit 51.6, just above the 50 mark that signals no change.

The growth was propelled by renewed expansion in both housing and commercial building.

Residential projects registered the biggest increase since May 2022 and the first rise in a year and a half.

While on the commercial side activity also rose solidly, ending a four-month sequence of decline.

“The March expansion was broadly based, but this conceals contrasting dynamics in the residential and commercial sectors,” said John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland.

“A surge in commencements has led to a pick-up in early-stage home-building activity. Our read is that housing delivery may struggle to reach the Government’s target in 2024.”

“However, the March PMI supports our view that the longer-term trend is positive. In contrast, the expansion in commercial activity has been driven by a final push to finish office blocks that were started some years ago.”

“When completed, these properties will add to already elevated vacancy, meaning that the only new starts for the foreseeable future are likely to be pre-let buildings.”

The research found activity had risen following increases in new orders, which also returned to growth during March following an eight-month sequence of reduction.

Construction firms also increased their staffing levels again in March, extending the current sequence of job creation to four months, with many companies saying they had recruited staff on a full-time basis.

The rate of input cost inflation quickened to a seven-month high, with higher transportation and labour costs reportedly adding to general inflationary pressures.

“In many ways the return to growth in March is no surprise. Employment, a classic leading indicator of activity, has risen in all but four of the last 36 months,” Mr McCartney said.

“Moreover, when directly questioned about their future expectations, Ireland’s building firms have been getting progressively more optimistic since July 2022.”

Article Source – Construction activity returned to growth in March – RTE

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