A decline was noted in the construction sector in the Republic for the second month in a row in June, with a significant drop in commercial projects. On the other hand, housing construction maintained its upward trend, with a “solid” growth in June.
BNP Paribas’s most recent index revealed a drop to 47.5 in June, down from 49.8 in May, indicating a contraction in sector activity. This was largely attributed to a resurgence in the fall of commercial activity. The decrease in commercial work marked the end of a three-month growth period, according to BNP. A slump in civil engineering activity also contributed to the decline.
John McCartney, BNP Ireland’s research leader suggested that commercial activity had spiked in the early summer as efforts were being made to complete large office schemes in Dublin. However, with large-scale projects such as Coopers Cross and Wilton Park now completed, a slowdown in June was inevitable. Despite this, McCartney pointed out that there’s a good amount of office space still being developed, ensuring that the commercial sector will remain comparatively active for at least another 18 months.
In contrast, residential construction continued to grow robustly, rising for a third consecutive month in June. BNP noted that the overall decrease in construction activity occurred despite a surge in new orders.
Although the growth of new orders moderated in May, it was the fourth consecutive rise. Some companies reported receiving recurring orders from existing customers. Input cost inflation rates increased to a 14-month high due to rising supplier fees and continued geopolitical issues causing supply chain delays.
McCartney expressed that the government’s intentions to increase its housing production goals to roughly 50,000 units per year have helped maintain the optimism of residential builders. While the strong activity in June could not guarantee an immediate increase in housing completions, McCartney highlighted the positive developments in new orders, employment, and materials purchases as indicators of a positive long-term outlook.
The UK Government has established an agenda named ‘Housing for All’, aiming to complete 34,600 homes this year, followed by 36,100 and 36,900 in the years 2025 and 2026 respectively. Nevertheless, these set objectives are likely to be adjusted and increased in the next few months owing to fresh research. This research proposes that between 35,000-53,000 houses may need to be built annually to adequately meet the nation’s accommodation needs.