Construction activity in Ireland is displaying ‘improving growth momentum’, with activity rising at the fastest pace for a year in March, according to the latest AIB Ireland Construction PMI.
The index rose to 53.2 from 52.1 in February, as output rose across housing and commercial construction, while civil engineering continued to decline, although the rate of decline was lower than in previous months.
New orders increased for the fourth month in a row, supporting the rise in activity. Employment in the sector also increased, with firms reporting additional hiring over five consecutive months. Elsewhere, purchasing activity rose for the fifth consecutive month, reaching the strongest increase in more than four years.
Growth drivers
“From a sectoral perspective, growth continued to be driven by two of the three sub-sectors,” commented John Fahey, AIB senior economist. “Once again, the best performing of the three was commercial activity. It recorded its fastest pace of expansion in a year.
“Building activity in the residential sector posted its second successive month of growth for the first time since the first half of 2025. The pace of growth improved compared to February and was also its fastest in a year. Meanwhile, civil engineering retained itsposition as the weakest of the three sub-sectors, although the rate of contraction eased for the fourth month in-a-row.”
The rate of inflation in input prices was the highest since December 2022, with firms linking higher costs to fuel prices. Supplier delivery times lengthened, and respondents reported difficulties linked to materials and transport.
Future expectations
Business expectations for the year ahead remained positive on balance, but confidence declined compared with earlier months. Respondents reported uncertainty linked to international conditions, including the war in the Middle East.
“There were further signs of improved momentum in some of the other key underlying details in the March report,” Fahey added. “The new orders index, which is regarded as a leading indicator, registered its fourth consecutive month of expansion. Meantime, construction firms raised their staffing levels amid the backdrop of increased workloads. The pace of hiring was at its highest since the end of 2024.
“Elsewhere, the impact of higher fuel costs was cited as a factor in input price inflation rising at its fastest pace since December 2022. Irish construction firms continued to convey an optimistic view on the prospect for increasing activity levels over the coming 12 months. However, the uncertainty arising from the conflict in the Middle East saw confidence levels fall to a four-month low.” Read more here.
