The level of home building slipped for the second successive month in June as conditions in the wider construction sector remained subdued, new data from AIB show.
The bank’s latest PMI report – effectively a pulse check of the sector – shows the rate of decline in home building in the month was modest, but the fastest in almost 18 months.
That said, companies “remained optimistic” that activity in the wider sector will increase over the coming year, with confidence reflecting expected improvements in demand, “particularly related to housing”.
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However, concerns around geopolitical issues and economic uncertainty meant that optimism eased to a three-month low.
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The dip in home construction comes after May marked the first fall in activity in nine months. Minister for Housing James Browne has admitted it will be “very challenging” to hit the Government’s housing targets this year.
Just 30,330 homes were completed during 2024, while the programme for government pledges to deliver more than 300,000 by the end of 2030.
There were 5,938 new dwelling completions in the first quarter of this year, data from the Central Statistics Office shows, which was a rise of 2 per cent on the same three months of 2024, but still low in the context of this year’s target of 41,000.
The latest AIB data show total construction activity decreased slightly again, despite growth in commercial activity.
New orders, employment and input buying continued to rise, albeit at modest rates. Input costs increased sharply, but at the slowest pace in five months.
The headline PMI rate was 48.6, down from 49.2 in May, and therefore pointed to a sharper reduction in total construction activity. Any reading above 50 indicates growth.
Civil engineering activity was also down, leaving commercial as the sole source of growth during the month. Commercial activity increased for the fifth month running, and at the same solid pace as in May.
Where total activity decreased, companies linked this to economic uncertainty and muted demand conditions. On the other hand, some firms noted that new contracts had been secured.
Indeed, new orders increased for the fifth consecutive month at the end of the second quarter. The rate of expansion was only modest, however, and broadly in line with that seen in the previous month.
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Employment also rose slightly in June, and at the slowest pace in the current four-month sequence of job creation. According to respondents, additional staff were hired to help fulfil orders and work on future projects.
As well as raising employment, firms also expanded their purchasing activity and increased their usage of subcontractors. Here, too, however, rates of expansion eased since May.
Inflationary pressures softened in June. Input costs continued to rise sharply, but the latest increase was the slowest since January, coming in broadly in line with the series average. Meanwhile, the rates charged by subcontractors rose at the weakest pace in four months.
Finally, suppliers’ delivery times lengthened further amid reports of staff shortages at vendors.
