The construction sector shrinks for the third straight month, with civil, commercial and residential construction activity hit

The construction sector contracted for a third straight month in December, with falling workloads, supply shortages and rising costs leading companies to lay off workers.

NP Paribas Real Estate’s construction activity index fell to 43.2 in December from 46.8 in the previous month, the sharpest decline since last July.

Any reading below 50 indicates a contraction.

All construction activity – civil, commercial and residential – contracted in December, the index showed, with civil engineering performing the worst and residential not far behind.

New orders fell for the ninth straight month and employment fell, the sharpest drop in 21 months.

There was some good news on costs, which were still rising in December but at the slowest pace in 21 months.

Looking ahead, construction bosses expect to be busier by this time next year.

John McCartney, director and head of research at BNP Paribas Real Estate Ireland, said 2022 will be “a two-half year”.

“The strong expansion between January and May gave way to a slowdown in activity from June, and the year ended with another pronounced slowdown in December.

“The slowdown is happening across the board. Construction companies do not appear to be counting on an immediate recovery.

“After nine months of the decline in new business, the panellists have now begun to destock and not replace employees who are leaving.”

But Mr McCartney said government action – including the Croí Cónaithe housing scheme and the equity ownership scheme – together with the central bank’s relaxed mortgage restrictions “could give builders confidence that they will be able to sell property at bargain prices in a sustainable development.” “.

Figures from commercial property specialist CBRE last week show that the Dublin office market has enjoyed its strongest year since the pandemic, with take-up up around 35 per cent to 206,000 square meters in total through 2021.

In the last quarter of last year, 48 new transactions were completed, with commercial, financial, pharmaceutical and public sector tenants being the most active.

But tech customers — who accounted for just two of the top 10 deals in the fourth quarter of last year — are expected to decline this year, according to CBRE director Colin Richardson, with non-tech customers being the most active in renting space.