Construction activity in Ireland continued to expand in February, but BNP Paribas Real Estate Ireland joined a chorus of concerns that rising cost pressures in the sector could affect the viability of the property. the projects.
The company’s latest Construction Purchasing Managers’ Index (PMI) recorded a figure of 58.4 last month, up from 56.1 in January.
Any figure above 50 shows expansion, any figure below, shows contraction.
The most recent reading was the tenth consecutive monthly expansion in construction activity recorded by this index.
“February PMI shows construction activity is now growing at its fastest pace since the post-lockdown recovery last summer,” said John McCartney, director and head of research at BNP Paribas Real Estate Ireland.
He said commercial buildings showed the strongest activity for the third month in a row.
“This comes as no surprise as the amount of logistics space under construction in Dublin more than doubled last year and 2022 is set to be the biggest year in terms of office completions since 2007. ” he said.
And while residential construction also performed strongly last month, Mr McCartney warned that continued cost pressures could weigh on the sector.
He pointed out that construction companies have been reporting increasing costs for almost two years now.
“Unfortunately, things can get worse before they get better,” he warned. “In addition to the impact of Brexit, Covid and the Ukraine conflict on material costs, labor costs could also increase.”
Raw material shortages caused input costs to continue to rise last month, with inflation unchanged from January.
Mr McCartney said wage pressures in the construction sector had remained “contained” so far, despite an additional 23,300 construction workers being hired last year.
“However, the February PMI shows that the hiring pace has slowed and some companies are now reporting difficulties finding staff,” Mr. McCartney said.
“This could eventually lead to wage inflation, which would exacerbate existing cost pressures and have side effects on viability.”
The Association of Notary Surveyors in Ireland also warned that the viability of many construction projects could be affected by higher input costs and staff shortages.
https://www.independent.ie/business/irish/rising-costs-and-staff-shortages-could-hit-building-fresh-data-shows-41442706.html Rising costs and staff shortages could hit construction, new data shows