- Total construction activity down amid fall in commercial work
- Housing activity expands amid rising new orders
- Input cost inflation at 14-month high
The headline seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index remained below the 50.0 no-change mark in June, and fell to 47.5 from 49.8 in May. The reading signalled a second consecutive monthly reduction in total construction activity, and one that was solid.
Underlying data suggested that a renewed fall in commercial activity was a key factor behind the latest reduction in total activity. Work on commercial projects decreased sharply, ending a three-month sequence of growth. A rapid fall in civil engineering activity was also recorded in June.
More positively, housing activity continued to rise, with the expansion in June the third in as many months. The latest increase in residential activity was solid and slightly faster than that seen in May.
The reduction in total construction activity was recorded in spite of a further increase in new orders during June. The expansion of new business was the fourth in a row, albeit modest and softer than in May. Some firms indicated that they had received repeat orders from existing clients.
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Alongside rising charges by suppliers, geopolitical issues were partly behind higher input prices. The rate of input cost inflation quickened to a 14-month high and was above the pre-pandemic average.
Commenting on the latest survey results, John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland, said, “Commercial activity surged through the spring and early summer as builders pushed to get large office schemes in Dublin completed. But with campus-scale projects like Coopers Cross and Wilton Park now delivered, activity inevitably eased-back in June. Nonetheless, considerable office space remains under development and the commercial sector should remain relatively busy as this is run-out over the next 18- months.
“The Government has been under pressure for some time to increase its home-building targets and its stated intention to revise these to around 50,000 units per annum has underpinned residential builders’ confidence. Activity rose strongly for the fourth successive month in June. As we flagged back in February, this may not result in increased housing completions within the current calendar year. However recent momentum, in conjunction with an upward trend in leading indicators such as commencements, new orders, employment and materials purchases all signal that the longer-term direction of travel remains positive.”
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