A survey of the construction industry indicates that activity in the sector fell for the seventh month in a row at the start of 2024.
The BNP Paribas Real Estate Ireland Construction Purchasing Managers' Index (PMI) recorded 45.9 – slightly better than December’s 45.1, but still well below the key 50 mark. Any figure below 50 means that activity fell.
BNP Paribas said that the slowdown in the overall pace of decline was largely due to a better performance in the housing sector, with activity on residential projects falling only slightly (48.5).
Commercial activity also fell at a softer pace – rising from 42.8 in December to 44.7.
While firms expected improvements in new business in the coming 12 months, the level of optimism fell in January.
Expected improvements in workloads, however, encouraged construction firms to take on additional staff in January. Employment increased for the second month in a row, and at a solid pace (53.5) that was the fastest in almost a year.
John McCartney (director and head of research, BNP Paribas Real Estate Ireland) said that the relative outperformance of residential reflected the strength of the new-homes market, as consumers were benefiting from substantial State subsidies, and prices were rising by more than 10% a year.
“With the temporary waiver of development contributions due to expire in April, it will be interesting to see whether the strong momentum in residential commencements during 2023 will continue over the coming months, leading to resumed expansion in the housing PMI,” he added.
“The commercial slowdown is as expected, and understandable in the context of oversupply in office markets,” he concluded.