Activity in the construction activity continued to decrease in October, but the rate of decline eased substantially from September amid a near-stabilisation of new orders, a new survey showed today.
AIB's Construction PMI shows that commercial activity returned to growth last month, outperforming the residential and civil engineering categories.
The seasonally adjusted Construction Total Activity Index remained below the 50 no-change mark in October, but saw a marked increase to 48.1 from 43.7 in September to signal a much weaker reduction in construction activity at the start of the final quarter.
The latest fall was the softest since June, AIB noted, but added that output has now decreased in each of the past six months.
Today's index shows that with overall workloads continuing to ease, companies scaled back their employment and purchasing activity. Construction firms also faced a sharp and accelerated increase in input costs.
AIB said the the overall reduction in construction activity reflected falls in both housing and civil engineering.
Activity on residential projects decreased sharply, and at the fastest pace in two and a half years. But bucking the wider trend, commercial activity increased for the first time in three months, if only slightly.
There were also signs of stabilisation in new orders in October. The latest decline was only marginal and the weakest in the current three-month sequence of contraction as some firms reported being busier, AIB said.
That said, customer caution and associated delays in decision making meant that new business continued to fall, it added.
With workloads easing, companies again scaled back their staffing levels and purchasing activity. Firms posted the first back-to-back reductions in employment since the end of 2022, while input buying decreased for the fourth successive month.
Meanwhile, input costs continued to rise sharply, with the pace of inflation moving higher and coming in broadly in line with the series average. Companies also reported higher fuel and raw material costs.
John Fahey, AIB Senior Economist, said the AIB Irish Construction PMI survey for October indicated a
further contraction in building activity levels at the start of the fourth quarter.
He noted that the index has now been below the key breakeven level of 50 for six consecutive months, although the October reading implies the mildest pace of decline in construction activity since June.
"The sectoral breakdown showed a divergence in performance among the three sub-sectors. Commercial construction activity ended its two-month period of contraction, returning to growth, albeit marginally last month," Mr Fahey said.
"Civil engineering continued to post declining activity levels, but at a less severe rate compared to September. In contrast, residential activity saw an acceleration in the pace of contraction, falling to its weakest level since June and extending its period of decline to six months," he added.
