Building activity in Ireland continued to decline in September, marking the fifth consecutive month of contraction across the construction sector, according to AIB’s latest monthly survey. The downturn affected all key segments — housing, commercial, and civil engineering — with sharper reductions in activity and new orders compared to August.
The AIB Ireland Construction Purchasing Managers’ Index (PMI) fell to 43.7 in September from 45.9 the previous month, signaling a faster pace of decline. Any reading below 50 indicates a contraction, and the latest figure represents the weakest performance since December 2022.
AIB Senior Economist John Fahey said residential construction activity “contracted for a fifth successive month, albeit at a marginally slower pace compared to the previous month.” However, he warned that the commercial sector remained under pressure. “The commercial sector stayed in contraction territory for a second month running, with the pace of decline accelerating,” he said.
Civil engineering continued to record the sharpest decline among the three categories, with activity dropping at its fastest rate since October 2022. Fahey also noted that new orders — a key indicator of future workloads — “paint a weak backdrop for the sector.”
Despite the slowdown, the survey found that many construction firms remain cautiously optimistic. Businesses expect activity to improve over the next 12 months, supported by government housing initiatives and potential stabilization in demand.
While the broader sector struggles, there are some positive developments in the housing market. Approved housing body Respond announced plans to complete nearly 1,000 new social and cost-rental units this year — its highest annual output to date.
Respond said it currently has 3,458 homes under construction across Ireland, as it works to address the country’s ongoing housing shortage. “It is critical we are enabled to continue to deliver homes now and into the future to meet Government targets and address urgent housing need,” said Niamh Randall, spokesperson for the organisation.
Among Respond’s recently completed projects are 334 social and cost-rental homes at Seven Mills in Dublin, 18 social homes in Blackpool, Cork, and 97 homes in Drogheda, Co Louth.
The latest figures underline the challenges facing Ireland’s construction sector amid higher interest rates, rising costs, and uncertain demand. However, the continued delivery of social housing projects by bodies like Respond provides a glimmer of resilience in an otherwise subdued market.
