Construction activity as a whole remained steady last month but work on housing projects increased in a positive sign for the Government’s housing targets, according to the latest BNP Paribas Real Estate Ireland index for the sector.
The company’s index for construction activity came in fractionally below the 50 no-change mark “to signal broadly stable output”. This was down from a 53.2 reading in April and ended a two-month sequence of expansion.
“Despite the pause in growth seen for total construction activity, work on housing and commercial projects continued to increase in May,” BNP said.
The acceleration in housing and commercial activity was linked to an uptick in new orders, the third in as many months.
The May figures also recorded an increase in employment “with staffing levels up for the sixth month running in response to higher new orders.”
BNP, however, noted the rate of job creation eased to the weakest in this sequence.
Although input costs continued to increase “sharply” during May amid higher material prices, the pace of inflation eased to a four-month low, it said.
“News from the construction sector remained positive in May with continued increases in activity across the key residential and commercial segments,” BNP Ireland’s head of research John McCartney said.
“The former is no surprise – even looking through disruption which may have been caused by the development contributions waiver deadline in April, housing commencements have been on a sustained upward trend since October 2022,” he said.
Mr McCartney said that on the commercial side, activity has been driven by office construction in Dublin where more space was delivered in the first quarter of this year “than in the entire of 2023″.
“Forward-looking indicators on the dashboard are now uniformly pointing in the direction of continued expansion,” he said.
“Order-books have been replenished over the spring months, and materials purchases and employment are up as a result. Supporting these trends, input costs inflation has stabilised and supply chain issues appear to be easing with lead-times shortening,” he said.
The Government’s Housing for All strategy targets 34,600 completions this year, 36,100 in 2025 and 36,900 in 2026. However these targets are expected to revised upwards in the coming months in response to Government-commissioned research on housing demand.
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