Construction levels ease in May, but employment rises for sixth month

The construction sector contracted slightly in May after two consecutive months of expansion, the most recent BNP Paribas Real Estate Ireland shows the construction PMI.

The index gave a reading of 49.8 last month, just below 50.0 unchanged and down from April’s reading of 53.2.

Housing (52.0) and commercial (51.4) project work rose for the third month in a row, albeit at a softer pace of expansion than in April (53.4 and 54.6, respectively).

New orders also rose at a substantial pace (52.9), but again at a slower pace than last month (53.9).

Steady growth in employment was also recorded, with staffing levels increasing for the sixth consecutive month, although the rate of job creation was the weakest in the current sequence.

Input costs continued to rise sharply due to higher raw material prices, but inflation eased to a four-month low.

Meanwhile, companies signaled an improvement in supplier performance for the first time in ten months. Input delivery times have recently been shortened modestly, but by the most since October 2010.

Capacity improvements at suppliers were said to be responsible for shortening delivery times.

“The news flow from the construction sector remained positive in May with continued growth in activity in the main residential and commercial segments,” it said. John McCartneydirector and head of research at BNP Paribas Real Estate Ireland.

“The former is no surprise – even given the disruption that may have been caused by the development contribution waiver deadline in April, housing starts have been on a steady upward trend since October 2022.

“On the commercial side, activity has been driven by office construction in Dublin, where more space was delivered in the first quarter than in all of 2023.”

McCartney said forward-looking indicators were uniformly positive and that replenished order books were responsible for higher material purchases and employment.

Construction was steady in May after two months of expansion. (photo: Getty Images)

“Supporting these trends, input cost inflation has stabilized and supply chain issues appear to be easing as lead times shorten,” he added.

“Reflecting these dynamics, nearly 90% of construction firms now expect to be as busy or busier within a year, compared to 81% nine months ago.”

(photo: Getty Images)

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