Construction sector activity continues to contract as demand weakens
Ireland’s construction industry recorded another month of declining activity in November, marking the seventh consecutive month of contraction, according to the latest Purchasing Managers’ Index from AIB. The data signals ongoing pressure across the sector, with firms reporting a continued drop in new orders and subdued demand for building projects.
The headline Construction Total Activity Index fell further below the neutral threshold of 50, slipping from 48.1 in October to 46.7 in November. AIB attributes the decline to slower demand and a reduction in new project commencements, which have not been sufficient to replace completed work. Businesses surveyed pointed to delays, weaker client pipelines and fewer confirmed contracts as key factors driving the downturn.
All three areas tracked by the PMI saw reduced activity during the month. Commercial construction experienced a notable reversal, returning to contraction after a brief period of modest growth in October. Residential building also remained under pressure, although the pace of decline eased to its slowest level since June. Civil engineering continued to perform the weakest, with an accelerated rate of contraction compared with the previous month.
New orders fell for the fourth consecutive month, reflecting broader uncertainty and a slowdown in planned investment. Firms highlighted project postponements and a lack of forward commitments as persistent challenges.
AIB Senior Economist John Fahey stated that November’s reading signals a renewed loss of momentum in the sector as the fourth quarter progresses. He noted that the index has remained below the breakeven point for seven months, showing that the softness in activity is widespread across commercial, residential and civil engineering work.
Despite the weaker activity levels, the report identified some positive elements. Employment in the construction sector increased in November after declines in the previous two months. Businesses indicated they were maintaining staff in anticipation of improved conditions next year. Sentiment also remained broadly positive, although optimism dipped slightly compared with October.
The study found that companies continued to reduce their reliance on subcontractors. Availability of subcontractors also tightened, pointing to ongoing capacity constraints even as workloads fall.
Overall, the PMI results suggest a sector facing persistent headwinds yet still displaying confidence about long-term prospects, particularly in relation to future project pipelines and employment planning.
Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.
