Housing activity falls sharply but builders remain optimistic about output next year
Lower Also To Orders And The New Current Employment Almost Number Led The Scale In First Pa Of Declined For Picture: Year Constructors A Time Back Workloads
Housing targets are at risk of being missed next year as the construction industry suffered a sharp fall in activity in November while staff levels also declined, according to a leading survey.
The continued weakness in residential construction was “surprising” said John McCartney, director and head of research at BNP Paribas Real Estate Ireland in the organisations latest purchasing managers index (PMI).
Mr McCartney remained optimistic though about housing output going into the new year as commencements continue to rise while the latest national accounts showed investment in new dwellings climbed 8.4% compared with the first nine months of 2022 and completions were also up by 8.8% in the same period.
Mr McCartney said the slowdown in residential construction in October and November was mostly likely caused by the completion of projects as the sector reaches the end of the year. He added:
Business confidence strengthened among respondents though as 32% of respondents predicted a rise in activity over the coming year.
Housebuilding has stayed at the top of the agenda for politicians in Ireland as a general election looms and the country continues to grapple with a housing crisis, therefore efforts will be made to support construction in this area.
Meanwhile, other areas in the construction industry continue to be vulnerable to volatile economic activity and dragged the PMI’s total reading down from 47 in October to 44 in November. Anything above 50 is considered expansion and anything under is seen as contraction.
The decline in commercial property activity last month was unsurprising said Mr McCartney despite a “record year” for Dublin warehouse completions and “significant development in Cork".
“However, rising interest rates and construction costs have made developers more cautious, therefore the 2024 pipeline is weaker and early-stage activity is being impacted,” said Mr McCartney.
Companies experienced a sharp rise in input prices, and one that was the fastest since August.
The number of new orders also declined and lower current workloads led constructors to scale back employment for the first time in almost a year.