News

Activity across Ireland’s construction sector declined again in December, marking the eighth consecutive month of contraction, according to the latest Purchasing Managers’ Index from AIB.

The survey shows that output fell across all three areas covered, residential, commercial and civil engineering. The pace of decline eased in each category, with residential construction recording the mildest slowdown and its softest fall in seven months.

The headline seasonally adjusted Construction Total Activity Index remained below the 50 threshold that separates growth from contraction. December’s reading of 48.4 represented an improvement on November’s figure of 46.7 and indicated the slowest rate of decline since June 2025.

While overall activity remained subdued, the latest data points to improving underlying conditions as the year came to a close. New orders rose for the first time in five months, reflecting firmer client demand. In response, firms increased employment, purchasing activity and their use of sub-contractors.

Some respondents cited delays to project start dates as a factor behind lower activity levels. Others reported increased workloads linked to stronger customer enquiries, which supported the return to growth in new business during December.

Confidence builds heading into 2026

Business sentiment within the sector strengthened to its highest level since January of the previous year. Construction firms expressed growing confidence that activity will recover over the next twelve months, supported by rising enquiries and an improved pipeline of work.

The renewed increase in new orders encouraged companies to continue expanding staffing levels and purchasing activity for a second month in succession. Firms also increased their use of sub-contractors for the first time in six months, leading to reduced availability.

Despite these positive signals, challenges remain. Difficulties in sourcing materials persisted, and input costs rose sharply again. Although cost inflation eased from November’s recent peak, it remained above the average level recorded across 2025.

Commenting on the findings, AIB’s Senior Economist noted that the December index reading suggests a slower pace of contraction as the sector enters the new year. Weakness remained evident across all sub-sectors, though residential construction performed relatively better than commercial and civil engineering activity. The return to growth in new orders and continued job creation were highlighted as encouraging indicators for the months ahead.

Disclaimer: This article is based on publicly available information and is intended for general guidance only. While every effort has been made to ensure accuracy at the time of publication, details may change and errors may occur. This content does not constitute financial, legal or professional advice. Readers should seek appropriate professional guidance before making decisions. Neither the publisher nor the authors accept liability for any loss arising from reliance on this material.