Irish commercial building activity rose significantly in March, becoming the best performing category within a construction sector that expanded at its fastest rate in three years last month despite rising cost inflation.
In its latest construction purchasing managers’ index, AIB said a strong rise in new business led to growth in employment in the industry as housing activity increased for the seventh month in a row.
The commercial, housing and civil engineering sectors all saw growth in March, despite the bank noting that the pace of input cost inflation quickened again, reaching the fastest rate in nearly two years.
The headline figure in the Construction PMI Index rose to 53.9 from 48.7 in February. Any figure above 50 indicates growth; a number below that signals contraction.
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However, even as indicators show an improvement in the sector, confidence dropped to a 16-month low amid uncertainty around US trade policy.
The report, compiled by S&P Global, is based on the responses of about 150 construction companies.
John Fahey, senior economist at AIB said the headline index indicated that the sector had “some upward momentum” at the end of the first quarter, labelling the overall growth as a “significant improvement” on February’s figure.
“It is also the first time since December of last year that the index is back above the key 50 level, consistent with an expansion in activity,” he said, with growth in all three sub-sectors.
“There were also some promising signs emanating from the new orders index, which is considered a key leading indicator. Orders expanded for the fourth time in the past five months and at its sharpest pace since July 2024.”
Mr Fahey said the construction firms that responded to the survey put the growth down to the recommencement of projects previously on hold.
“Meanwhile, the sector saw a return to jobs growth last month, as firms increased staffing levels in response to new business,” he said, but noted that, while confidence among the industry is still optimistic, it is at its lowest level since late 2023.
