Construction activity in Ireland fell below the no-change mark in September, although new business expanded further and employment returned to growth.

The BNP Paribas Real Estate Ireland construction purchasing managers’ index, published by S&P Global on Monday, posted 49.0 in September.

This was down from 50.0 - the neutral level separating growth from decline - in August, and showed total activity has declined in four of the last five months.

Commercial activity returned to contraction in September having grown in August, S&P Global said. However, housing activity returned to growth and residential project work ‘has now increased in six of the past seven months’.

New business rose ‘for the seventh month running’ and respondents said client demand had improved. Employment ‘increased modestly’, reversing August’s decrease, as firms raised staffing levels in response to the increasing orders.

The rate of input cost inflation eased for the third month in a row, and reached its slowest rate since January despite September’s ‘sharp increase’.

‘September continued along the lines of the last six months with overall activity broadly flat and residential construction out-performing commercial,’ commented BNP Paribas Real Estate Ireland’s Director & Head of Research John McCartney.

‘This pattern reflects conditions in these respective markets. House prices and, to a lesser extent, rents are rising strongly and the demand for residential property is well underpinned by population growth, the strong economy and government schemes like Help to Buy which was extended again in the recent budget.

‘Notwithstanding a continuous rise in costs since the spring of 2020, these factors have given builders confidence that they can deliver housing profitably, and residential commencements are strongly up. In contrast rising office vacancy has caused new starts in the commercial sector to dry-up, dragging on overall activity.’

The BNP Paribas Real Estate Ireland 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 responses were collected between September 12 and 27.

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