House building slumped last month as rising costs sparked by the US-Iran conflict slowed construction countrywide, new figures show.
The Government wants 300,000 homes built in the State by 2030, while it has pledged billions of euro to infrastructure projects meant to pave the way for residential construction.
But figures published on Tuesday by AIB show that rising costs slowed construction sharply last month, hitting housing and commercial building.
The bank’s construction Purchasing Managers’ Index (PMI) registered 45.4 in June. Any reading below the benchmark 50 signals a slowdown on the previous month, while a result above that figure indicates growth.
READ MORE
Within that, the housing index tumbled to 40.4, the biggest fall among the three industry categories tracked by the index.
June was the third consecutive month in which residential construction slowed, while the fall was the steepest in four years, according to AIB senior economist John Fahey.
Commercial construction, which monitors the building of factories, shopping centres and other business premises, slipped to 46.
Civil engineering, which includes State-sponsored infrastructure building, dropped to 42.7, the index shows. Builders blame the higher oil and raw material costs that have resulted from war in the Middle East for the slowdown, the report states.
The report comes as the conflict once again escalates, with the vital Strait of Hormuz shipping lane at the centre of hostilities.
The PMI also indicates that the slump will continue, with companies saying the rate at which they are getting orders for new work is slowing.
Fahey noted that rising prices are deterring builders’ clients from committing to new projects. Prices remained high last month, “with many firms continuing to link this to the fallout from the Middle East conflict”, he says.
How can tech offer solutions for obesity and weight management?
Builders hope civil engineering will start growing following a long-term slowdown as the State starts seeking bids for work on projects to boost water supplies, the electricity network, schools, roads and public housing, according to Paul Sheridan, the Construction Industry Federation’s (CIF) director of main contracting.
The federation’s own outlook reports have consistently shown slowing civil engineering activity in recent years, he acknowledged.
However, Sheridan said the CIF expects “this pattern to shift to a more positive outlook in the medium term” as State bodies begin work on big projects.
The Government’s €270 billion National Development Plan includes Dublin’s MetroLink, an underground rail line connecting the city centre with its airport and an overhaul of wastewater drainage and treatment in the capital, among other proposals.
Fahey said that the PMI shows builders are optimistic that business will improve in the near future.
“Confidence levels on the prospect for increasing activity levels over the coming year improved for the second month in a row,” he said.
