The downturn across the construction sector here showed signs of moderation last month as activity levels stabilised and new orders grew. The BNP Paribas Real Estate Ireland Construction Total Activity Index remained below the neutral 50.0 threshold in February, coming in at 49.8, up slightly from the 47.7 recorded a month previously. It was the fifth successive reduction in total activity registered by the index. But the decline was very small, at a level that was the weakest over the period of the decline.
“New order books are expanding and, through their words and actions, building firms appear to be confident that this will be sustained,” said John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland.
"The proportion of construction companies saying that they expect to be busier in 12 months' time it at its highest level since Feb 2022 – a trend that is also evident in the manufacturing and services PMIs." “Consistent with this, materials purchases have picked-up markedly and builders are taking-on additional staff at the fastest pace in a year.”
Reductions were seen in both housing and civil engineering activity although rates of decrease eased to four and 11-month lows, respectively. For the first time since last September, commercial activity rose a small amount, bucking the wider trend.
"Although residential activity eased slightly, the pace of contraction has softened considerably," said McCartney. "This aligns with other positive indicators in the sector. The Dublin Housing Supply Coordination Task Force counted 18,600 new dwellings under construction in the capital at the end of September 2022, and further 3,488 have been commenced in the capital since then – a 42% year-on-year increase." "Meanwhile 2023 is set to be the biggest ever year of warehouse construction in Dublin, and potentially the biggest year for office building since 2008."
Renewed growth in new business volumes provided further signs of market improvement. The latest upturn, albeit only slight, was the first registered since last March and linked to stronger project pipelines and better underlying demand conditions.
Firms responded to the increased order book volumes by growing their staffing levels and increasing their purchasing activity, with a second successive month of employment growth. Input buying also showed an uptick disrupting the prior eight-month sequence of decline. However, supply chain disruption remained a factor, causing longer lead times while cost pressures worsened. Growth forecasts were positive though for the sixth month in a row and the degree of optimism was the brightest in a year.