Construction orders fall amid near-record cost pressures

business
Construction Orders Fall Amid Near-Record Cost Pressures Construction Orders Fall Amid Near-Record Cost Pressures
Despite the drop in demand for new orders, business sentiment picked up slightly from March’s 17-month low. Photo: PA Images
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New construction orders fell in April for the first time since March 2021 as near-record cost pressures dampen demand on the sector.

According to research from BNP Paribas Real Estate Ireland, c0nstruction PMI fell to 52.5 in April, down from 53.9 in March.

However, employment and output continued to rise, but at a slower pace than at the turn of the year.

Despite the drop in demand for new orders, business sentiment picked up slightly from March’s 17-month low, but was still the second-lowest in the past year-and-a-half and below average.

Companies highlighted cost pressures from energy and fuel, which were widely reported to have risen in price.

Global inflationary pressures, raw material shortages and the conflict in Ukraine were all cited as key factors behind increasing cost burdens.

Commenting on the latest survey results, John McCartney, director and head of research at BNP Paribas Real Estate Ireland, said: "The latest PMI confirms that construction activity continued to expand in April, but was variable by sector.

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"The housing sub-index indicates that the strong residential activity that was seen in Q1 continued into April, despite the headwinds of supply chain disruption and increased costs.

"The commercial activity indicator also showed solid expansion. This is no surprise as the pipeline of office and logistics property to be delivered this year is at its highest since 2008."

Housing was recorded at 56 on the index, while commercial activity also grew to 55.7.

There were 5,669 housing completions in Q1 of this year, up 45 per cent.

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"Civil engineering was notably weak, however, with the April reading showing an outright contraction in activity for the second successive month," Mr McCartney continued.

"This coincides with reports that spiking energy and materials prices were making contractors less willing to take-on public works contracts.

"The Government’s new Inflation Cooperation Framework seeks to address this by providing a structured and collaborative approach to quantifying and apportioning unforeseen additional costs."

BNP Paribas Real Estate Ireland has forecast for construction output to grow by 15.4 per cent in 2022.

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