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Irish Independent
08-07-2025
- Business
- Irish Independent
Construction activity falls at fastest rate in 18 months, index reveals
The building slump included a reduction in work on housing projects. While the rate of decline was modest, it was still at the fastest level in almost 18 months. Economic uncertainty, which is dampening demand, is being blamed. The commercial sector bucked the trend, with activity there increasing for the fifth month running, and at the same solid pace as in May. This indicates there has been an uptick in office development, following the post-pandemic slump. The headline figure for the AIB Ireland Construction PMI dipped to 48.6, down from 49.2 in May and 52.4 in April. This means it remained well below the 50 no-change mark, indicating a continuing sharp reduction in total construction activity. The findings will be an irritant for the Government, as it aims to build 41,000 new homes this year, a target that Housing Minister James Browne recently admitted is 'not realistic'. The Central Bank has reduced its forecast of delivery to 32,500 units. New construction orders did increase, for the fifth consecutive month, but the rate of expansion was modest. Employment rose slightly in June, but at the slowest pace in four months. ADVERTISEMENT Firms did report expanding their purchasing activity, and are using more sub-contractors. Once again, however, the rates of expansion were down on May. John Fahey, AIB's senior economist, said the construction survey indicated a muted performance for the sector. 'Looking at some of the key indices in the report, the new orders component, which is regarded as a leading indicator, expanded for the fifth month in a row, with the pace of growth broadly similar to the previous month,' he said. 'The continued growth in new orders meant construction firms increased their staffing levels. 'Employment rose for a fourth straight month, albeit at a slower pace compared to May. Construction sector firms retained an optimistic outlook that activity levels would increase over the coming 12 months. 'An expected improvement in housing activity was cited as one of the reasons underpinning this perspective.' Inflation in construction softened in June. While input costs rose again, it was at the slowest pace since January. The rates charged by sub-contractors rose by the lowest amount in four months. Suppliers' delivery times lengthened further, amid reports of staff shortages at vendors. The AIB Ireland Construction PMI survey is compiled by S&P Global from responses to questionnaires sent to a panel of about 150 construction firms. The Government has pulled a number of policy levers in a bid to stimulate building activity. Just under 6,000 new homes were completed in the first quarter of this year, a rise of only 2pc compared to the same three months of 2024, a year which ended with just 30,300 units being completed. In the latest policy moves, proposals to reduce to the minimum size for apartments, and to remove mandatory requirements for communal space in new apartment developments, are going to the Cabinet today. Mr Browne is also proposing to lift restrictions on the number of one-bedroom apartments that are allowed in a development. It currently stands at no more than 50pc. He also wants to reduce the minimum permitted size of a studio apartment from the current 37 sq m to 32 sq m. Along with changes to the rent caps, which are in train, the idea is to stimulate activity by the private sector, and lure investors back into apartment development. Government sources have been quoted as saying that the changes being planned could result in a cost reduction of between €50,000 and €100,000 per unit. Another change being considered is to give more powers to the Land Development Agency (LDA), which has been asking commercial semi-state bodies to hand over surplus land for housing. Mr Browne recently told the Dáil that the Government is considering options to accelerate this process, including amending the LDA Act to allow the agency to issue a directive to a commercial state body to hand over a site.
Irish Examiner
08-07-2025
- Business
- Irish Examiner
Construction sector records fastest activity decline in almost 18 months
The Irish construction sector recorded a contraction in activity for the second month in a row during June as both housing and civil engineering work saw declines, the latest AIB Ireland Construction Purchasing Managers' Index (PMI) shows. According to the PMI, business conditions in the construction sector remained subdued in June with total activity decreasing slightly again, despite growth in commercial activity. Meanwhile, new orders, employment and input buying continued to rise but at modest rates. The PMI reading for June stood at 48.6 - down from 49.2 in May. A reading of 50 would indicate no change in the sector while a reading below it represents a decline in activity. 'The rate of decline was modest, but the fastest in almost a year-and-a-half… In line with the picture for total construction activity, work on housing projects decreased for the second successive month in June,' the PMI said. John Fahey, senior economist with AIB said the PMI indicated a 'muted performance' for the sector heading into the second half of the year. The latest AIB Ireland Construction Purchasing Managers' Index (PMI) shows work on housing projects decreased for the second successive month in June. File photo: Yui Mok/PA He said the June reading implies a 'quicker pace of contraction in construction activity at the end of the second quarter'. 'Residential construction activity contracted for a second successive month. The pace of reduction was modest, but it did contract at a faster rate compared to May,' Mr Fahey said. 'Meanwhile, civil engineering was, once again, the weakest of the three sub-sectors, with activity contracting for the second month in a row also.' Housing completions The declines in the housing construction sector comes as both the Economic and Social Research Institute (ESRI) and Central Bank of Ireland revised downwards their expected home completions for this year. The ESRI has previously suggested that up to 53,000 new homes a year could be needed by 2030 given the increasing population demands. There were just under 6,000 new homes completed during the first quarter of the year - a slight increase of 2% compared to the same period in 2024. Further measurements Commercial construction activity was the only source of growth in the sector last month which increased for the fifth month running, and at the same solid pace as in May. In the areas that saw a decline in activity, firms reported this was linked to economic uncertainty and muted demand conditions. On the other hand, some firms noted that new contracts had been secured. New orders increased for the fifth consecutive month while employment also rose slightly in June but at the slowest pace in the current four-month sequence of job creation. 'According to respondents, new staff were hired in order to help fulfil orders and work on future projects,' the PMI said. Input costs for the sector also increased during June but at the slowest pace in five months. In its outlook, the PMI reported that firms in the construction sector were optimistic that activity will increase over the coming year particularly in the area of housing. 'That said, concerns around geopolitical issues and economic uncertainty meant that optimism eased to a three-month low. As well as raising employment, firms also expanded their purchasing activity and increased their usage of sub-contractors,' the PMI said.
Irish Independent
10-06-2025
- Business
- Irish Independent
Housing activity drops for first time in nine months, but input costs rise sharply
The headline figure for the AIB Ireland Construction PMI dipped to 49.2, down from 52.4 in April, and below the 50 no-change mark, indicating a slight reduction in total construction activity. Uncertainty around US trade policy is thought to be one reason for the dip. New orders continued to grow, but the rate of expansion was at a three-month low. The decrease in housing activity ended an eight-month sequence of growth, but the rate of decline was less than in the civil engineering sector. Commercial activity continued to rise, following a good showing in April. John Fahey, senior economist with AIB, noted that the headline index suggested a modest contraction in activity levels for construction, the first time since February it had fallen below 50. 'There were some encouraging signs contained in other aspects of the May report,' he said. 'New orders, which are regarded as a leading indicator, expanded for the fourth month in a row, although the pace of growth was at a three-month low. The construction sector also continued to increase its staffing levels. 'Employment rose at its fastest pace since January as firms prepared for the start of work on new projects. 'Firms in the construction sector continued to hold an optimistic view that activity levels will increase over the coming 12 months. This outlook was underpinned by the prospect of new projects getting under way.' Input costs increased sharply again, with the pace of inflation little changed from April, which was itself above the series average. Sub-contractor rates also rose rapidly, with the pace unchanged from the one-year high recorded in April. When construction companies bought materials in May, they were again faced with lengthening delivery times, which they sometimes linked to staff shortages at suppliers. Staffing levels rose for a third consecutive month, although modestly. The rate of expansion in the use of sub-contractors also quickened. Sub-contractor availability decreased to the largest extent since June 2022. The rise in new orders, and the impending start of new projects, contributed to the optimism in the construction sector about the year ahead. The AIB Ireland Construction PMI survey is compiled by S&P Global from responses to questionnaires sent to a panel of about 150 construction firms.
Irish Examiner
09-06-2025
- Business
- Irish Examiner
Construction activity falls for first time in three months
Irish construction firms saw a reduction in activity for the first time in three months during May amid market uncertainty and signs of demand easing, AIB has found. Publishing its latest Ireland Construction PMI, the lender noted that new order growth continued, but the rate of expansion softened to a three-month low. Meanwhile, companies continued to expand their staffing levels, purchasing activity and use of subcontractors. At the same time, on the price front, input costs increased at a similarly rapid pace to that seen during April. The headline seasonally adjusted AIB Ireland Construction Total Activity Index dipped to 49.2 in May from 52.4 in April, posting below the 50.0 no-change mark for the first time in three months and signalling a slight reduction in total construction activity midway through the second quarter. While some firms were able to increase activity, in line with improving customer demand, elsewhere there were signs of softening market conditions and uncertainty, leading to a drop in overall activity. A renewed decrease in housing activity was recorded in May, thereby ending an eight-month sequence of growth. The rate of decline was only marginal, however, and much softer than that seen for civil engineering, which also posted a renewed fall in activity. More positively, commercial activity continued to rise, with the solid expansion broadly in line with that seen in April, AIB noted. The reduction in construction activity in May was recorded despite continued growth of new orders, which increased for the fourth consecutive month. That said, uncertainty around US trade policy contributed to a softening in the pace of expansion to a three-month low. The rise in new orders and the impending start of new projects contributed to positive sentiment regarding the year-ahead outlook for construction activity and led to further increases in employment and purchasing activity. Staffing levels rose for the third consecutive month, AIB said, noting that although modest, the pace of job creation was the strongest since January. The rate of expansion in sub-contractor usage also quickened and was the most pronounced in 2025 so far, the index found. Meanwhile, sub contractor availability decreased to the largest extent since June 2022. 'From a sectoral perspective, commercial activity was once again the best-performing of the three sub-sectors," said AIB senior economist, John Fahey. "It registered growth for the fourth straight month in May and at a similar pace to April. In contrast, residential construction activity contracted, albeit marginally, for the first time in nine months."
Sydney Morning Herald
27-05-2025
- Business
- Sydney Morning Herald
Healthscope's ills point to unhealthy connection between public patients and private profit
Merging hospital services with for-profit businesses, creating a quasi-capitalistic-socialistic entity, is a complex task. We see this in the financial difficulty facing Healthscope and its 38 hospitals, now under receivership. This stumbling business is causing every Australian government; Commonwealth, state and territory, acute problems. But the NSW government has the extra problem of a failing Healthscope business – the Northern Beaches Hospital (NBH) – which is meant to provide public hospital services for Sydney's northern coastal suburbs. The NBH money problems were foreshadowed in the NSW Audit Office report of April 2025. Healthscope, operator of the $500 million for-profit, public hospital, needs to transfer the hospital to the government, well before the contract's 2038 end date. The current NSW government, while opposed to privatised public hospitals, is reluctant. But before exploring this dilemma, a review of private participation in public services sets the background. Beginning in the 1990s, Australian governments were fixated by illusions of savings through privatising traditionally-provided government functions. Some wanted 'to throw the private sector a (profitable) bone or two' as the late NSW premier John Fahey would say. Others wanted to reduce government debt by shedding responsibilities to the private sector. But governments also wondered whether private sector firms were inherently more efficient. The Howard federal governments turned aged care and childcare into profit-seeking industries. They privatised government IT systems, employment services and government buildings and they replaced public servants with thousands of contractors. Led by NSW governments, state governments allowed private toll roads, privately-run prisons, private water desalination plants, public schools built and maintained by private firms, the sale of government occupied buildings; they also authorised for-profit public hospitals. Loading Governments mostly managed this outsourcing incompetently. Taxpayers nearly always paid more, billions more, because of these privatisations. In 1994 the Fahey government, the owner of the newly built Port Macquarie Hospital, authorised Mayne Nickless to operate it as a for-profit public hospital. So troubling and costly was the deal that the responsible minister, Ron Phillips, declared the Coalition would never do another. It was left to the Carr government to pay a reported $35 million in 2004 to buy out the contracts.
