The seasonally-adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index rose to 53.2 in April, up from 51.6 in March. This index, compiled by S&P Global from responses to a questionnaire sent to approximately 150 construction firms, indicates a monthly increase in activity when above 50, and a decrease when below.
The March-April figures represent the first consecutive monthly expansion in nearly two years. Other leading indicators also showed positive trends, suggesting a sustained increase in building activity. This development is promising for Taoiseach Simon Harris and his government as they work towards ambitious house-building targets.
Construction firms surveyed reported increases in both housing and commercial projects. While commercial projects posted the strongest expansion figures, the rise in residential activity was described as “solid.”
John McCartney, head of research at BNP Paribas Real Estate Ireland, commented on the results: “The March rebound continued in April with the PMI showing further expansion, and at a faster rate. Increased activity was reported across the board.”
McCartney noted a significant shift in residential construction. “The number of dwellings under construction dipped last year as completions had been outstripping new starts. However, this situation has reversed dramatically with twice as many commencements (11,956) as completions (5,841) in the first quarter of 2024.”
There was some uncertainty about whether the surge in commencements was a one-off, driven by builders rushing to meet an April 24 deadline for a waiver of development contributions. This deadline has since been extended.
“Leading indicators on the PMI dashboard suggest that the momentum may be sustained,” McCartney said. “New orders, employment, and input purchases all rose further, while 87% of building firms said they expected to be as busy or busier this time next year.”
The strong expansion in commercial building was attributed to a long pipeline of office blocks reaching the finishing-out stage. “With oversupply in the market, the flow of speculative office-starts tailed off some time ago. Therefore, refurbishments and retrofits, rather than new builds, will account for an increasing share of commercial activity over the medium term,” McCartney explained.
The pace of input-cost inflation remained stable in April, though prices continued to rise. Some companies reported higher oil and transportation costs in particular.
The continued growth in Ireland’s construction activity, as indicated by the BNP Paribas Real Estate Ireland Construction Total Activity Index, is a positive sign for the industry. With increases in both housing and commercial projects, and positive leading indicators, the outlook for the construction sector appears promising. However, the industry must remain vigilant about rising input costs and potential market oversupply.
This sustained growth will be crucial for meeting the government’s housing targets and addressing the ongoing demand for residential and commercial spaces in Ireland.
