Construction activity falls for first time in three months

While some firms were able to increase activity, in line with improving customer demand, elsewhere there were signs of softening market conditions and uncertainty, AIB said 

The headline seasonally adjusted AIB Ireland Construction Total Activity Index dipped to 49.2 in May from 52.4 in April, posting below the 50.0 no-change mark for the first time in three months and signalling a slight reduction in total construction activity midway through the second quarter. Picture: iStock

Irish construction firms saw a reduction in activity for the first time in three months during May amid market uncertainty and signs of demand easing, AIB has found. 

Publishing its latest Ireland Construction PMI, the lender noted that new order growth continued, but the rate of expansion softened to a three-month low. 

Meanwhile, companies continued to expand their staffing levels, purchasing activity and use of subcontractors. At the same time, on the price front, input costs increased at a similarly rapid pace to that seen during April.

The headline seasonally adjusted AIB Ireland Construction Total Activity Index dipped to 49.2 in May from 52.4 in April, posting below the 50.0 no-change mark for the first time in three months and signalling a slight reduction in total construction activity midway through the second quarter.

While some firms were able to increase activity, in line with improving customer demand, elsewhere there were signs of softening market conditions and uncertainty, leading to a drop in overall activity.

A renewed decrease in housing activity was recorded in May, thereby ending an eight-month sequence of growth. The rate of decline was only marginal, however, and much softer than that seen for civil engineering, which also posted a renewed fall in activity. 

More positively, commercial activity continued to rise, with the solid expansion broadly in line with that seen in April, AIB noted.

The reduction in construction activity in May was recorded despite continued growth of new orders, which increased for the fourth consecutive month. That said, uncertainty around US trade policy contributed to a softening in the pace of expansion to a three-month low.

The rise in new orders and the impending start of new projects contributed to positive sentiment regarding the year-ahead outlook for construction activity and led to further increases in employment and purchasing activity.

Staffing levels rose for the third consecutive month, AIB said, noting that although modest, the pace of job creation was the strongest since January.

The rate of expansion in sub-contractor usage also quickened and was the most pronounced in 2025 so far, the index found. Meanwhile, sub contractor availability decreased to the largest extent since June 2022.

“From a sectoral perspective, commercial activity was once again the best-performing of the three sub-sectors," said AIB senior economist, John Fahey. 

"It registered growth for the fourth straight month in May and at a similar pace to April. In contrast, residential construction activity contracted, albeit marginally, for the first time in nine months."