Surge in activity as Covid fears wane – but input costs are still increasing

And this year is expected to be the strongest in more than a decade for office completions in Dublin, according to BNP Paribas Real Estate Ireland.

New figures released this morning by the property firm show that its construction purchasing managers’ index hit 56.1 last month, compared to 53.7 in December.

Any figure above 50 on the index indicates expansion, and any figure below 50, contraction.

BNP Paribas said that rising workloads and a jump in business optimism prompted companies to ramp up their purchasing activity and take on extra staff last month.

But input costs have continued to rise while supply chain issues persist, according to the latest report from the property group.

“The key signal emerging from Irish construction firms in January is confidence,” said John McCartney, director and head of research at BNP Paribas Real Estate Ireland.

He said a gauge of future expectations in the sector hit 75.3 in January – the highest reading in more than three years.

“Employment in the panel of surveyed firms has been expanding month-on-month since April 2021, and the pace of hiring accelerated in January,” he added.

While construction activity accelerated across commercial, housing and civil works, the report notes that the pace of growth was strongest in the commercial sector.

Mr McCartney noted that the reading for the commercial activity index rose to 56.7 last month, from 54.5 in December.

“Based on projects already onsite, 2022 is expected to be the strongest year since the global financial crisis for Dublin office completions,” he said.

“There is also now increased logistics construction ongoing around Dublin as developers respond to a rising demand for storage space due to strong goods consumption and supply-chain reconfigurations.”

The property firm said that global material shortages have continued to result in higher input costs for the construction sector, with increased charges for energy and shipping also reported by respondents to its survey.

The report said that the use of sub-contractors by Irish construction firms also rose last month. However, there was a sharp fall in their availability, contributing to a “further steep rise” in their rates.