Key points:

  • Steep reduction in commercial activity
  • Employment returns to growth
  • Business confidence at seven-month high

The headline seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index remained below the 50.0 no-change mark in December, but increased to 45.1 from 44.5 in November to signal a softer pace of decline in the final month of the year. That said, the rate of contraction in total construction activity remained marked and extended the current sequence of reduction to six months.

Of the three types of construction covered by the report, the sharpest reduction was seen for commercial activity where the rate of contraction was sharp and faster than that seen in November. Activity on housing projects fell markedly, but to a lesser extent than in the previous survey period.

On a more positive note, employment returned to growth in December, after having fallen for the first time in 11 months during November. The hiring of additional staff in part reflected confidence in the outlook for 2024.

Our ‘Marketing to Ireland’s Construction Market’ section includes details of principal contractors, housebuilders, architects and other specifiers. The feature also provides details of key media channels and the full data can be downloaded in MS Excel database format. Access now via the Directory page.

Business sentiment rose to a seven-month high amid some hopes that new projects will be secured in the new year. More than 34% of respondents predicted a rise in activity over the coming 12 months, against 15% that were pessimistic.

Higher charges by suppliers resulted in a further sharp increase in input costs during December, although the rate of inflation eased from that seen in November and was softer than the average for 2023 as a whole.

Commenting on the latest survey results, John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland, said, “The stand-out figure in December’s PMI was a continued plunge in commercial activity. Leaving aside Covid lockdowns and the decline seen last August, the latest reading was the weakest in over a decade. Commercial values have inevitably been impacted by higher interest rates, and this has been compounded by soft occupational demand in some sectors, particularly offices. At the same time, input costs have continued to rise, albeit at a declining pace. The net effect has been squeezed development margins, stemming the flow of new project starts. Residential activity slowed again, but at a softer pace than in November. However, commencements are up by almost 18% between January and November, suggesting a positive outlook for the sector. Consistent with this, employment rose for the 11th time in 12 months in December, and reported optimism reached its highest level since last May.”

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