The construction activity sustained contraction in January 2023, according to BNP Paribas, though rates of reduction for both output and new orders softened notably from December.
The rate of input cost inflation eased to a two-year low while lead times lengthened to the least extent since February 2020.
The headline seasonally adjusted BNP Paribas Real Estate Ireland Construction Total Activity Index posted at 47.7 in January, up from 43.2 in December, and indicative of a fourth successive monthly reduction in Irish construction output at the aggregate level.
The Construction PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 150 construction companies. The panel is stratified by company workforce size, based on contributions to GDP.
The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease.
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As has been the case in each of the past 11 months, civil engineering firms recorded the strongest decline. Commercial activity saw the softest fall and one which was only mild, while housing activity declined for the fourth month in a row.
The sustained drop in output and demand led firms to decrease input buying for an eighth month in a row. Prices reportedly continued to rise across a broad range of products, though the rate of inflation was the least pronounced in two years.
However, subcontractor rates increased at an accelerated and marked pace. January data also pointed to sustained falls in sub-contractor availability, usage, and quality.
According to BNP Paribas, confidence strengthened to an 11-month high. Optimism reportedly stemmed from hopes that demand conditions would improve in the future, with new projects set to begin in the coming months.
John McCartney, head of research, commented: “This month’s PMI is distinctly more upbeat than those of recent months. Supply chain delays have eased somewhat, perhaps reflecting the reopening of the Chinese economy.
“The relaxation of bank and local authority mortgage rules, and the raising of price caps in the government’s shared equity scheme will give builders greater confidence in future selling prices. Meanwhile the new Renter Tax Credit and a widening of the net for social housing support will help underpin the rental market.
“With confidence at an 11 month high, housing commencements have picked-up strongly in recent months, construction firms have resumed hiring, and 85% of builders now expect to be as busy or busier in one year’s time.”
