Stabilisation in construction activity; signs of momentum ahead
There are renewed signs of momentum in the construction sector, the latest Purchasing Managers’ Index from BNP Paribas Real Estate Ireland indicates.
Although activity in the sector registered at just below the 50 break-even point separating expansion from contraction in the month of July, there were encouraging signs in the report.
The survey captured a marked expansion in new orders in the month which was the sharpest since February 2022.
New business has now risen for five successive months.
Companies responded to higher workloads by taking on additional staff, the eighth consecutive month in which this has been the case, the report noted.
“That said, the rate of job creation was only marginal and the softest in the current sequence of rising employment.”
The sesonally adjusted Total Activity Index registered at 49.9 in July. The reading was up from 47.5 in June and signalled a near-stabilisation in activity in the month.
Housing activity increased for the fifth consecutive month, and at the fastest pace since April.
Commercial activity was broadly unchanged following a sharp reduction in June.
Firms expanded their purchasing activity in July, both in response to higher new orders and to replenish stocks.
“The solid increase in input buying was the fastest in 28 months,” the report noted.
Input costs rose sharply, however, with the pace of inflation remaining above the series average despite easing slightly from that seen in June.
John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland and author of the report, pointed out that new dwelling completions were down 8.6% in the first half of the year.
“This means 20,700 units need to be delivered in the second half for the Government’s target of 33,450 completions to be met – an 11% increase over H2 2023.
“Given that the number of units under construction in Dublin was down 13% year-on-year as we entered 2024, this would appear to be quite challenging,” he concluded.
However, he pointed out that commencements had picked up sharply in recent months.
“The increased activity indicated by the PMI points to stronger output ahead – although it may be 2025 before the recent surge in early-stage construction yields a material uplift in completions,” Mr McCartney said.
Article Source – Stabilisation in construction activity; signs of momentum ahead – RTE
