BNP Paribas Real Estate Ireland Construction PMI®: Employment Falls for First Time in 9 Months but Activity Increases

Key points:

• Total activity unchanged in August
• Sixth successive increase in new business
• Employment down for first time in nine months

The headline seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index registered exactly at the 50.0 no-change mark in August, signalling stability of total activity midway through the third quarter of 2024. The reading was broadly in line with the figure of 49.9 posted in July.

Any growth in the sector during the month was generally found in the commercial category, where activity increased for the first time in three months. Meanwhile, housing activity was broadly stable following a five-month sequence of expansion.

New orders continued to rise in August, although the pace of expansion took a step back from the 29-month high seen in July. The granting of new contracts helped firms to record an increase in new business, extending the current sequence of growth which began in March.

Meanwhile, Irish construction firms registered a fall in employment, thereby ending an eight-month sequence of job creation. Moreover, the solid decline was the most pronounced in almost three-and-a-half years.

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Input costs continued to rise sharply in August, and the rate of inflation remained above the series average despite easing to a three-month low. Panellists reported general material price increases, plus higher charges from subcontractors.

Commenting on the latest survey results, John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland, said, “Construction employment has been on an almost unbroken upward trend since Ireland’s economy reopened after Covid. However, for only the second time in twenty months, hiring went into reverse in August. This triangulates data from the recent Labour Force Survey which indicated a fairly pronounced pull-back in construction employment.

“Paradoxically, there does not appear to be any lack of demand for builders – wage growth in the sector has gone from -2.2 per cent per annum one year ago to 11.75 per cent currently, which suggests intensifying competition to recruit scarce workers. Likewise today’s PMI indicates that order books are expanding and the vast majority of building firms expect to be at least as busy this time next year. Therefore taking everything in the round, the data suggest that the sector may now be encountering labour constraints.”

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