Home building rate shrinks for first time in nine months amid wider dip in construction
The level of
home building
contracted for the first time in nine months during May, amid a wider fall in activity at Irish construction firms.
Overall construction dipped for the first time in three months in May, as Minister for Housing
James Browne
admitted it would be 'very challenging' to hit the Government's housing targets this year.
The latest data from
AIB
on activity in the construction sector shows firms posted a reduction in their activity in the month, amid 'market uncertainty and signs of demand easing'.
Just 30,330 homes were completed during 2024, while the programme for government pledges to deliver more than 300,000 by the end of 2030.
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There were 5,938 new dwelling completions in the first quarter of this year, data from the Central Statistics Office shows, which was a rise of 2 per cent on the same three months of 2024, but still low in the context of this year's target of 41,000.
The data from AIB show new order growth continued, but the rate of expansion softened to a three-month low.
A Government report on residential construction and retrofitting skills suggests just under 80,000 construction workers need to be recruited to meet targets, and AIB said companies continued to expand staffing levels, purchasing activity and use of subcontractors in May.
However, on the price front, firms told the bank that input costs increased at a similarly rapid pace to that seen during April.
The headline figure dipped to 49.2 in May from 52.4 in April, posting below the 50 no-change mark for the first time in three months and signalling a slight reduction in total construction activity midway through the second quarter.
While some firms were able to increase activity in line with improving customer demand, elsewhere there were signs of 'softening market conditions and uncertainty', leading to the drop in overall activity.
Housing activity shrank during the month, thereby ending an eight-month sequence of growth.
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The rate of decline was 'only marginal', however, and much softer than that seen for civil engineering which also posted a renewed fall in activity.
Commercial activity continued to rise, with the solid expansion broadly in line with that seen in April.
The reduction in construction activity was recorded despite continued growth of new orders, which increased for the fourth consecutive month.
That said, uncertainty around US trade policy 'contributed to a softening in the pace of expansion to a three-month low'.
The rise in new orders and impending start of new projects contributed to positive sentiment regarding the year-ahead outlook for construction activity and led to further increases in employment and purchasing activity.
Staffing levels rose for the third consecutive month. Although modest, the pace of job creation was the strongest since January.
The rate of expansion in subcontractor usage also quickened and was the most pronounced in 2025 so far. Meanwhile, subcontractor availability decreased to the largest extent since June 2022.
Where construction companies bought materials, they were 'again faced with lengthening delivery times', which they sometimes linked to staff shortages at suppliers. Lead times lengthened solidly, albeit to the least extent in eight months.
Meanwhile, input costs increased sharply again, with the pace of inflation little changed from that seen in the previous month, remaining above the series average.
Subcontractor rates also rose rapidly, with the pace unchanged from the one-year high posted in April.
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