House building registered a sharp increase last month, with the rate of growth hitting a one-year high even as higher fuel costs intensified inflationary pressures, according to a new report from AIB.
The bank’s latest construction PMI data pointed to improving growth momentum in the Irish construction sector during March. Building activity in the residential sector posted its second successive month of growth for the first time since the first half of 2025.
Inflationary pressures intensified, however, often due to higher fuel costs, which also impacted suppliers’ delivery times, with shortages of materials and difficulties finding drivers also contributing to a marked lengthening of lead times.
Uncertainty as a result of the war in the Middle East acted to dampen business sentiment in March, with confidence in the year-ahead outlook easing to a four-month low. That said, on balance, firms still predicted a rise in activity, often as a result of positive demand expectations.
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Total activity increased at a sharper rate amid a further solid expansion in new orders. In turn, companies raised employment and purchasing activity to greater extents at the end of the first quarter.
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The headline PMI figure rose to 53.2 from 52.1 in February, signalling a solid monthly rise in construction activity at the end of the first quarter of 2026. Output has now increased in two successive months, with the latest expansion the fastest for a year.
Improving trends were seen across each of the three categories of construction monitored by the survey.
Both housing and commercial registered sharper increases in activity than in February, with rates of growth hitting one-year highs. Meanwhile, civil engineering activity continued to fall, but the rate of decline was the least marked in the current 11-month sequence of contraction.
Survey respondents indicated that the securing of new business had been the main factor leading total activity to expand in March.
New orders increased for the fourth consecutive month. Although the rate of expansion softened slightly from the four-year high posted in February, it remained solid.
Sustained increases in workloads and the start of new projects led construction firms to expand both their staffing levels and purchasing activity in March. Workforce numbers increased for the fifth consecutive month, with firms often reporting the hiring of full-time employees.
Moreover, the rate of job creation was the fastest in 15 months. Firms also increased their usage of subcontractors to a greater extent than in February.
Meanwhile, the rate of growth in input buying was the most pronounced in just over four years as purchasing rose for the fifth month running.
Less positive was a sharp acceleration in the rate of input cost inflation, with the latest increase the most pronounced since December 2022. Close to half of all respondents signalled a rise over the month, with inflation often linked to higher fuel costs.
