Ireland construction activity contracts in April, outlook weakens

(Alliance News) - Ireland's construction activity contracted in April as the sector faced increased lead times and higher input costs brought about by the war in the Middle East, S&P Global reported Tuesday.

The AIB Ireland construction purchasing mangers' index fell to 47.1 points in April from a one-year high of 53.2 points in March.

A reading above the 50-point neutral mark indicates an overall increase in business activity from the previous month, while a reading below signals a contraction.

John Fahey, AIB senior economist, said: "Looking at the sectoral breakdown, commercial retained its position as the best performing of the three sub-sectors. It posted its third consecutive month of growth, albeit the pace of expansion was much slower compared to the previous two months.

"Meanwhile, activity levels in the residential sector contracted in April after registering growth over the February to March period. Elsewhere, civil engineering recorded its twelfth successive month of contraction."

New orders in the construction sector fell for the first time in five months and fuel protests contributed to a considerable increase in supplier delivery times, which lengthened by the largest extent since May 2022.

Survey respondents highlighted inflationary pressures, with input costs rising sharply in April primarily due to higher fuel costs caused by the war in the Middle East.

"The latest rise was the fastest since June 2022 as close to 68% of respondents signalled an increase over the month," S&P Global said.

The Middle East war also resulted in some clients holding off their commitments to new projects during the month.

S&P Global said: "Some firms reported that they had brought forward purchasing of materials amid price and supply disruption, leading to a further solid increase in input buying during April."

Employment in the sector continued to grow with workforce numbers rising by the greatest extent in over two years.

Looking ahead, confidence in the outlook for construction activity was weaker, falling to the lowest level in almost three-and-a-half years.

However, some respondent do anticipate a recovery in new orders and activity growth over the next 12 months.

S&P Global compiles the PMI each month using survey responses from a panel of around 150 construction companies in Ireland.

By Elijah Dale, Alliance News senior reporter Asia-Pacific

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