11th August 2026

Key points:

Renewed rises in output and new orders
Further solid increase in employment
Input cost inflation softens, but remains marked

The latest AIB Ireland Construction PMI® data signalled a rebound in the sector as the second half of the year got underway. Both total activity and new business saw renewed rises following marked falls in June, with all three categories of construction in positive territory. Firms continued to raise staffing levels and business confidence continued to recover modestly. Meanwhile, inflation and supplychain pressures softened during the month.

The headline seasonally adjusted AIB Ireland Construction Total Activity Index signalled a return to growth of Irish construction activity in July. At 53.0, the index was up sharply from June’s reading of 45.4 and pointed to a solid monthly rise in total output. Activity has now risen in four of the past six months.

For the first time in 15 months, all three monitored categories of construction saw activity increase in July. Commercial led the way, registering a solid rise in activity which was the fifth in the past six months. Meanwhile, modest expansions were recorded in housing and civil engineering activity, ending sequences of contraction of three and 14 months respectively.

Where activity rose, panellists often linked this to improved customer demand, and this was also evident with regards to new orders which increased following a marked fall in June. The rate of expansion was only slight, however, amid reports of a scarcity of tender opportunities.

As has been the case in each month since last November, construction firms increased their workforce numbers in July. The rate of job creation was solid, having quickened from June. Alongside the rise in employment, constructors also expanded their use of sub-contractors, and at the joint-fastest pace in almost three-and-a-half years. As such, the availability of sub-contractors decreased markedly.

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Meanwhile, purchasing activity was broadly stable, following a solid fall in the previous month. While some firms increased input buying in response to higher new orders, others indicated that their holdings of materials were sufficient to support current requirements.

July data signalled easing inflationary pressures and supply-chain disruption. Input costs increased rapidly again, but at the slowest pace in five months. Meanwhile. sub-contractor rates rose to the least extent since February 2025. The latest deterioration in vendor performance was the smallest in five months, although lead times still lengthened markedly amid reports of issues with international shipping.

Business confidence continued to tick higher from the recent low posted in April. Sentiment was at a four-month high, but still below the level seen prior to the outbreak of war in the Middle East. According to respondents, optimism reflected hopes of continued growth of new orders.

Commenting on the survey results, John Fahey, AIB Senior Economist, said, “The AIB Irish Construction PMI survey for July indicated that the sector started the third quarter with some renewed momentum. The headline index rose sharply and moved back into expansionary territory last month, printing at 53.0. This compared to a very weak 45.4 in June.

“The sectoral breakdown showed that the improvement in July was broad-based. Indeed, it was the first time since April of last year that all three sub sectors registered growth. The best performing of the three and main driver of the expansion was commercial. It returned to growth after contracting for the first time in five months in June. Meanwhile, activity levels in the residential sector expanded for the first time since March, albeit the rate of growth was modest. There was good news as well emanating from the civil engineering sector, with it recording its first month of growth since April 2025.

“There were also encouraging developments in some of the other key measures of the July survey. The sector continued to add jobs, with employment levels rising for a ninth month in a row and at a slightly quicker pace compared to June. There were some positive signs in terms of inflationary pressures, with the pace of increase in input costs at a five-month low, albeit they are still rising at a rate that is quicker than before the Middle East conflict. The new orders index, which is regarded as a leading indicator, returned to growth after contracting the previous month. Meanwhile, construction sector firms’ confidence on the prospect of increasing activity levels over the coming 12 months strengthened for a third successive report, in part due to optimism that the improvement in new orders would be sustained.”

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