The rate of construction across the country quickened last month following a slow start to the summer, although the housing sector saw only slight growth in volume.
New figures from AIB indicate that the grip of inflation and supply chain pressures have loosened around the building industry, with public infrastructure works recording its first month of growth since April last year.
The bank’s construction purchasing managers’ index (PMI) records the monthly changes in the volume of construction undertaken nationally and shares findings on the results compiled by a questionnaire of about 150 companies.
A reading above 50 on the index signifies growth in the sector. July’s result was recorded at 53.0, “up sharply” from last month’s figure of 45.4 which a senior AIB economist described as “very weak”.
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All three areas within the construction industry monitored by the PMI – housing, commercial and civil engineering projects – witnessed growth last month, although to varying degrees.
Housing saw slight growth, recording a figure of 50.5 on the index, which is linked to “improved customer demand”, AIB said. “The rate of expansion was only slight, however, amid reports of a scarcity of tender opportunities.”
Civil engineering projects, such as State-sponsored infrastructure of water supplies, electricity grids, road networks and public housing recorded growth, with 51.7 on the index.
This is the first month of growth within the sector since April 2025, following a worrying result of 42.7 last month. Builders blamed a rapid increase in oil prices and a sudden slowdown in raw material supplies as a result of the closure of the Strait of Hormuz in February, AIB said last month.
Despite this, John Fahy, a senior economist at AIB, said: “The sector continued to add jobs, with employment levels rising for a ninth month in a row and at a slightly quicker pace compared to June.”
Speaking on the PMI results more broadly, he said: “The sector started the third quarter with some renewed momentum.
“The best-performing of the three, and main driver of the expansion, was commercial” activity, he said, which “returned to growth after contracting for the first time in five months in June”.
Commercial construction, the sector that includes the building of factories, shopping centres and other business premises, recorded a result of 53.6, a “solid” increase from 46 the previous month.
Construction firms continued to increase their workforces, a trend witnessed since November last year, and “also expanded their use of subcontractors, and at the joint-fastest pace in almost 3½ years”, AIB said.
“Purchasing activity was broadly stable, following a solid fall in the previous month. While some firms increased input buying in response to higher new orders, others indicated that their holdings of materials were sufficient to support current requirements,” AIB said.
Confidence within business also improved, following a recent low in April, coming in at a four-month high. However, this is “still below the level seen prior to the outbreak of war in the Middle East”, AIB noted.
Fahy explained the improved outlook is “in part due to optimism that the improvement in new orders would be sustained”.
