(Alliance News) - Ireland saw an increase in overall construction activity in March, despite input cost inflation hitting a 39-month high, S&P Global reported Tuesday.
The AIB Ireland construction purchasing managers' index hit a one-year high and increased for the second month in a row, rising to 53.2 points in March from 52.1 points in February.
A reading above the 50-point neutral mark indicates an overall increase in business activity from the previous month, while a reading below signals a contraction.
John Fahey, AIB senior economist, said: "From a sectoral perspective, growth continued to be driven by two of the three sub-sectors. Once again, the best performing of the three was commercial activity. It recorded its fastest pace of expansion in a year.
"Building activity in the residential sector posted its second successive month of growth for the first time since the first half of 2025. The pace of growth improved compared to February and was also its fastest in a year."
Civil engineering continued to be the weakest of the sub-sectors, with the period of contraction extending into its 11th month in March. That being said, the rate of contraction in the sub-sector eased for the fourth consecutive month.
Survey respondents operating in the construction sector indicated that new business was the primary factor driving the expansion in activity. New orders rose for the fourth successive month in March, although the rate of expansion eased slightly from a four-year high in the previous month.
Both staffing levels and purchasing activity rose during the month as firms increased workloads and started new projects.
"Workforce numbers increased for the fifth consecutive month, with firms often reporting the hiring of full-time employees. Moreover, the rate of job creation was the fastest in 15 months. Firms also increased their usage of sub-contractors to a greater extent than in February," S&P Global explained.
On a more negative note firms reported a sharp acceleration in input cost inflation, which saw the most significant rise since December 2022. Respondents cited rising fuel costs as a key cause of inflationary pressures.
Furthermore, business sentiment was weighed down by the war in the Middle East with confidence for the year ahead softening to a four-month low.
Nevertheless, construction firms still predict that activity will rise going forward as a result of positive demand expectations.
S&P Global compiles the PMI each month using survey responses from a panel of around 150 construction companies in Ireland.
By Elijah Dale, Alliance News senior reporter Asia-Pacific
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