Construction sector increases hiring despite continuing slowdown

Index shows seventh successive month of contraction in activity and 12th month in 13 dating back to October 2022

Activity in Ireland’s construction sector slowed for the seventh month in succession in January although not as badly as at the end of last year.

The headline seasonally adjusted BNP Paribas Real Estate Ireland construction index was reading 45.9 in January from 45.1 in December. Any number below 50 signals contraction while figures above that point to expansion. Monthly activity has expanded only once since the beginning of last year, with June’s figure upsetting a trend dating back to October 2022.

Activity in the residential property sector registered at 48.2 in February, up from 45 in December. On the commercial side, the reading was 44.7, up from 42.8.

On a more upbeat note, hopes for an improvement in workloads encouraged construction firms to take on additional staff in January, with employment increasing for the second month in a row, and at a solid pace that was the fastest in almost a year.


Inflation continues to be an issue with input costs rising again but at a rate that was the slowest in the past three months. The 150 companies feeding into the survey did report general inflationary pressure, with some pointing to higher shipping costs for raw materials.

Commenting on the results, John McCartney, director and head of research at BNP Paribas Real Estate Ireland, said: “Construction activity continued to contract in January, but at a slower pace. This was particularly the case for residential which slowed much less than in December.

“The relative outperformance of residential reflects the strength of the new homes market where consumers benefit from substantial State subsidies and where average prices are rising by more than 10 per cent annually.

“With the temporary waiver of development contributions due to expire in April, it will be interesting to see whether the strong momentum in residential commencements during 2023 will continue over the coming months, leading to resumed expansion in the housing PMI.

He said the commercial slowdown was “as expected, and understandable in the context of oversupply in office markets particularly”.

Improvements in new business are expected in the months ahead, supporting optimism in the 12-month outlook for construction activity. But sentiment overall eased and was weaker than the series average.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times