Homebuilding slowdown in April hits steepest level yet this year – Irish Times

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A report by Irish property group BNP Paribas Real Estate said April’s slowdown in home construction was the seventh straight month, with the rate of decline “steep overall” and the most pronounced so far this year.

The report said Ireland’s construction sector “continued to struggle” in April as activity contracted sharply and growth in new orders, employment and material purchases slowed.

“It has given us little respite in terms of easing inflationary and supply pressures,” the report said.

“In fact, the extent of supplier performance deterioration and input price increases was greater than we saw in March.

The composite PMI rate, calculated using a range of factors, was 48.4, down from 49.5 in March. The 50 mark separates growth from contraction, with the latest measure showing the most pronounced decline in construction activity in Ireland this year.

The latest data highlighted a “sustained decline” in housing activity that was stronger than seen during the previous survey period, the report said.

Commercial activity, meanwhile, increased for the third straight month, albeit modestly. The overall slowdown in market demand weighed on construction activity, the report said.

Nonetheless, April survey data showed a continued increase in new order inflows at the beginning of the second quarter. However, customers are still reportedly wary of market conditions, and overall growth has been modest and historically subdued.

A similar increase in the number of employees was recorded in April as companies then expanded their workforce to match the increase in sales. As such, the job creation rate was the weakest for the current four months in a row.

Similarly, businesses increased their buying activity in April, but at the slowest pace in three months.

Elsewhere, Irish construction companies continue to work to further extend average delivery times. In fact, the extent of lead time deterioration was the largest since January.

The input cost increase rate peaked in October 2021 and has been on a downward trend, but in contrast, the cost increase rate picked up slightly in April.

The surge in fees charged by subcontractors also accelerated from March. This was despite the most significant deterioration in quality since the end of last year.

Subcontractor usage increased for the third consecutive month, but availability declined the most in nine months.

Firms remained positive about their production forecasts for the year ahead. Optimism centered mainly on hopes for a recovery in development activity. That said, confidence was relatively modest.

BNP Paribas director John McCartney said April’s construction trend “remains in a pattern that has continued since the beginning of the year.”

“Overall activity has shrunk again,” he said. “However, PMI leading indicators continued to suggest that activity could pick up. New orders picked up again.

“Consistent with this, raw material purchases continued to rise and employment increased for the fourth straight month. It rose to 30.2%.”

Two “undesirable developments” in April, according to McCartney, were a sharp contraction in housing activity and accelerating input cost inflation.

“The sharp slowdown in new home construction is clearly alarming and somewhat surprising given the sustained increase in housing starts since last November,” he said.

“Intensifying cost pressures, while bucking the trend of the last 18 months, have been relatively modest.”

The volume of new projects received by Irish construction firms rose for the third straight month in April. There were also reports of some improvement in the relative demand situation.

However, the overall growth rate remained modest against the background of caution in some markets.

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