DUBLIN - Ireland's construction industry has encountered its fifth consecutive month of decline, with housing activity experiencing its sharpest fall since April, despite an 8.4% rise in new dwellings investment and an 8.8% increase in completions. This downturn is largely attributed to the economic deceleration and the completion of projects as the year ends, as indicated by the BNP Paribas (OTC:BNPQY) Real Estate Construction Purchasing Managers' Index (PMI).
The commercial sector, too, is feeling the pinch with a less optimistic project pipeline for the upcoming year. Developers are facing increased interest rates and higher construction costs, leading to a cautious approach and a notable absence of speculative building, particularly impacting the Dublin office market where vacancies are on the rise.
Despite this challenging environment, there has been a 43% surge in planning permissions granted for both houses and apartments during the third quarter. However, this has not been enough to offset the overall slowdown in the sector. Employment numbers have also seen a reduction for the first time since last December due to diminishing workloads.
Input costs have risen sharply, marking the fastest rate since August, although inflation remains below previous years' levels. This cost pressure is affecting developments across Ireland, including Cork's development landscape.
In response to reduced workloads, some companies have initiated job cuts. Nonetheless, there is a sense of cautious optimism within the industry. Approximately one-third of respondents to the BNP Paribas Real Estate survey anticipate an upswing in construction activities by 2024, driven by new projects and expected economic improvements.
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