House building slowed sharply in the Republic last month as uncertainty triggered by the Middle East conflict hit orders across the construction industry, new figures show.
The AIB Ireland Construction Purchasing Managers’ Index shows building activity fell in April, the first time in three months, with fallout from the war and fuel protests hitting the industry.
The overall index fell to 47.1 last month. Any reading below the benchmark 50 indicates a fall in building activity on the previous month while any movement above that figure shows growth.
House building fell fastest of the three categories that the index tracks, sliding to 44.4, its first fall in three months.
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Builders reported that uncertainty sparked by the US-Israel-Iran conflict prompted clients to put projects on hold, according to AIB senior economist John Fahey.
Fuel protests that greeted initial petrol and diesel price hikes disrupted builders last month, delaying the delivery of key supplies and adding to lead times, the report says.
Work began on about 8,400 homes in the three months to the end of March, estimates from Ireland’s biggest estate agent, Sherry FitzGerald, showed in April.
This fuelled hopes that the construction industry could complete more than 40,000 dwellings this year.
However, the recent Irish House Builders’ Association conference heard that the industry became more cautious as the Middle East conflict dragged on.
[ Future housing supply under threat after new builds fall by more than 75%Opens in new window ]
Civil engineering, which covers taxpayer-funded infrastructure building, dropped to 46.7, its 12th fall in a row, according to the index, published on Tuesday.
Commercial building inched up to 50.3, its smallest increase in three months.
Higher fuel prices resulting from the choke on shipping in the Strait of Hormuz boosted companies’ costs, he added.
Lead times lengthened to the largest extent since May 2022, with shipping delays due to the war in the Middle East also impacting performance.
Some firms reported that they had brought forward purchasing of materials amid price and supply disruption, leading to a further solid increase in input buying during April.
“Meanwhile, the level of optimism regarding the outlook for construction activity was also negatively impacted by the war in the Middle East,” said Fahey.
New orders, an indicator of future business for builders, fell for the first time in five months, while the decline was the fastest since August 2023, the report notes.
However, builders said they were continuing to increase employment, spurred by growth in new orders over previous months.
