• Activity down for fourth month running
  • Rate of job creation quickens
  • Business confidence eases to 11-month low

The headline seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index dropped to 47.3 in October, down from 48.6 in September, and signalled a fourth consecutive monthly reduction in construction activity. The pace of decline was solid and faster than that seen in September, albeit less pronounced  than the contractions recorded over the summer. Panellists reported a general slowdown in market conditions. 

In contrast to the overall picture for the sector, commercial activity returned to growth in October, thereby ending  a three-month sequence of decline. That said, the rate of expansion was marginal. Meanwhile, a further reduction in activity on housing projects was signalled. 

Employment increased again in October, thereby extending the current sequence of growth to ten months. Moreover, the rate of job creation was solid and faster than that seen in the preceding survey period. 

Companies also maintained an optimistic outlook for the coming year amid hopes that new projects would be secured, thereby feeding through to growth of activity. That said, sentiment dropped sharply over the month and  was the lowest since November last year. There were some concerns about the potential impact of a weaker  economic climate on activity in the sector. 

Rising prices for a range of inputs meant that overall expenses increased markedly again in October. The rate of inflation softened to a four-month low, however, amid some signs of prices for certain items easing.

Latest Construction PMI Readings Sep ’23 Oct ’23 

Total Activity 48.6 47.3 

Housing Activity 48.9 45.2 

Commercial Activity 49.2 50.9 

Employment 51.2 53.4

Comment 

Commenting on the latest survey results, John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland, said:  

“The slowdown in residential activity during October seems surprising given the continued growth in housing commencements and completions this year. But the explanation is simple – completions have been rising  faster than commencements in recent months, causing the number of units under construction to edge lower.  

The expansion in commercial activity might also seem surprising as there has been little large-scale retail development and as the office market is already oversupplied. Again, however, the explanation is straightforward. Over 26,000 sq m of Dublin office space that was earmarked for completion in Q3 got delayed until Q4. With a further 75,000 sq m already scheduled for Q4 delivery, there is now a strong push to get projects completed by year-end. 

The medium term outlook for residential and commercial construction is quite contrasting. Over 18,000 new dwellings are currently underway in Dublin alone, and 2024 should be another strong year for housing  delivery. However, speculative office starts have dried-up in response to market signals, and the supply pipeline falls away sharply from next year.”