Uncertainty caused by the war in the Middle East led to a contraction in Ireland‘s construction sector in April, the latest AIB Ireland Construction PMI has shown.
According to the data, the headline total activity index fell to 47.1 in April from 53.2 in March, dropping below the 50-point level. The reading marked the first decline in construction activity in three months and the sharpest contraction since November 2025.
“The AIB Irish Construction PMI survey for April indicated that the sector lost momentum at the start of the second quarter as the uncertainty arising from the conflict in the Middle East weighed on activity,” commented John Fahey, AIB senior economist.
“The headline index fell back into contractionary territory last month, with a reading of 47.1. This compared to 53.2 in March.”
Market uncertainty
Construction firms reported that projects were being delayed or placed on hold because of uncertainty linked to the conflict in the Middle East and rapidly rising costs.
Housing activity declined for the first time in three months, while civil engineering activity remained in contraction for a twelfth consecutive month. Commercial construction was the only category to record growth, although the pace of expansion slowed significantly compared with previous months.
The survey also showed new business volumes fell for the first time in five months. Respondents linked weaker demand to clients delaying decisions on projects amid uncertainty and rising prices. The rate of decline in new orders was the sharpest since August 2023.
Business confidence weakened further during April, with sentiment falling to its lowest level in almost three-and-a-half years. According to the report, higher inflationary pressures and uncertainty about the wider economic outlook weighed on expectations for activity over the next 12 months.
Input costs
Elsewhere, input costs rose sharply during the month, driven mainly by higher fuel prices. Nearly 68% of respondents reported increased costs in April, with the rate of inflation reaching its highest level since June 2022.
Fuel protests and shipping disruption linked to the conflict in the Middle East also contributed to a significant deterioration in suppliers’ delivery times, which lengthened to the greatest extent in almost four years.
‘Subdued operating environment’
“Some of the other details in the survey also illustrate the subdued operating environment for the construction sector last month,” Fahey added. “The new orders index, which is regarded as a leading indicator, experienced a decline for the first time since November. The report noted that many respondents linked the fall to projects being put on hold due to the uncertainty caused by the Middle East conflict.
“The impact of the conflict was also reflected in higher fuel costs contributing to input cost inflation increasing at its highest level since June 2022. Meanwhile, the level of optimism regarding the outlook for construction activity was also negatively impacted by the war in the Middle East. Sentiment dipped to its lowest level since late 2022. One bright spot in the April report was firms continuing to expand their staffing levels.” Read more here.
