BNP Paribas Real Estate Ireland Construction PMI®: General Air of Optimism, With Residential Expanding

Key points:

• New orders return to growth
• Solid reduction in total construction activity, but housing activity rises
• Pace of job creation at seven-month high

The headline seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index posted 47.5 in November, down from 49.4 in October and signalling a reduction in total construction activity for the third straight month. Moreover, the fall was solid and the most pronounced since June. Some firms indicated that projects had been completed with insufficient new business to fully compensate, while others pointed to the impact of inflationary pressures on activity.

Bucking the wider trend, housing activity increased for the third consecutive month in November. That said, the pace of expansion was only slight and much weaker than that seen in October. Meanwhile, commercial activity continued to fall solidly.

After having fallen in October, new orders returned to growth in November. New business has now risen in eight of the past nine months, with the latest increase linked to the start of new projects and improved client demand. The solid expansion in new orders was the strongest since July.

Growth of new orders led construction firms to increase their staffing levels accordingly, often through the hiring of workers on a full-time basis. Employment was up for the third month running, and to the greatest extent since April.

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A further sharp increase in input prices was recorded in November, although the pace of inflation ticked down and was slower than the series average.

The securing of new projects for 2025 meant that construction firms remained optimistic that output will increase over the coming year. Around 38% of respondents predicted growth, with sentiment unchanged from the previous month.

Commenting on the latest survey results, John McCartney, Director & Head of Research at BNP Paribas Real Estate Ireland, said, “Cutting through the complexity in November’s data, three clear points emerge. Firstly, overall construction activity is being dragged lower by a contraction in commercial building. This is not necessarily a bad thing as some segments of the commercial market are over-stocked with space, and a slowdown in production will give demand a chance to catch-up with supply. Secondly, residential construction is bucking the overall trend, and activity has been expanding almost continuously since March. This dovetails with recent commencements data and suggests that 2025 will be significantly better than this year for housing delivery. Thirdly, the general air of optimism in the sector remains, with the forward-looking PMI elements such as order books, hiring and materials purchasing all pointing in a positive direction.”

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