Adverse weather impacts construction activity 

While the overall construction sector saw a reduction in activity, the home construction sub-sector actually recorded an expansion in January. Picture: Larry Cummins

Activity in the construction sector dropped during January as adverse weather conditions impacted work while new orders also dipped, the latest sector Purchasing Managers Index (PMI) shows.

During January, the AIB Ireland Construction PMI had a reading of 48.2, down from 51.6 in December, marking the fourth month of reduced construction activity in the past five months. 

The PMI figure is derived from a survey of companies, within the sector with any figure below 50 indicating a reduction in activity.

According to AIB, the poor weather conditions seen in January — particularly Storm Éowyn — contributed to the overall reduction in construction activity. In addition, new orders also dipped and companies lowered their purchasing activity accordingly. Input costs increased sharply again and firms were faced with supply-chain delays.

Senior economist at AIB John Fahey said despite the slowdown across the entire construction sector, housing was the best-performing sub-sector as it “managed to register a solid pace of expansion” during the month.

In contrast, both commercial and civil engineering activity contracted, with the latter retaining its position as the weakest of the three.

He added that the adverse weather conditions during January was “evident across other areas of the PMI construction survey”.

The PMI recorded a contraction in new orders during January as new business inflows were similarly affected by the stormy weather. The reduction in new business was the first in three months.

Purchasing activity was also down, falling for the second straight month and to the largest degree for two years.

Firms were also experiencing difficulties when it came to supplies with delivery times for inputs getting longer which was also linked to Storm Éowyn, but also due to staff shortages and stock issues at suppliers.

“Input costs increased sharply, with the rate of inflation remaining marked despite easing from that seen in December,” AIB said.

However, on a more positive note, employment within the sector continued to rise marking the fifth straight month of increases.

AIB said this latest increase was “only modest”.