Construction activity returns to growth after nine months of decline
Residential and commercial building drive renewed expansion as new orders and hiring increase
13 March 2026 | editor@breakingground.news
Construction activity in Ireland returned to growth in February following nine consecutive months of contraction, according to the latest AIB Ireland Construction Purchasing Managers’ Index.
The seasonally adjusted Construction Total Activity Index rose to 52.1 in February, up from 48.6 in January, moving above the 50 threshold that indicates growth for the first time since April 2025. The increase signals a modest recovery in activity levels during the early months of 2026.
The rebound was supported by improved demand conditions and stronger order books. New orders rose for the third consecutive month and at the fastest pace recorded since February 2022, suggesting a strengthening pipeline of work across the sector.
Growth was primarily driven by renewed activity in commercial and residential construction. Commercial building recorded its first expansion in four months and reached its strongest level since the end of the first quarter of 2025. Housing activity also returned to growth after ten months of decline, although the pace of expansion remained modest.
Civil engineering continued to lag behind the other segments of the sector. Activity in this area declined again in February, though the rate of contraction slowed for the third consecutive month.
The improving outlook encouraged firms to increase staffing and purchasing activity. Construction employment rose for the fourth month in a row, with the rate of hiring the strongest since January 2025. Companies also increased input buying at the fastest pace in almost four years as new projects commenced and workloads expanded.
Subcontractor use increased for the third successive month. However, availability declined sharply, reflecting ongoing capacity pressures within the supply chain.
Input cost inflation remained a challenge for firms. Companies reported continued increases in material prices, particularly metals, although the overall rate of cost inflation eased slightly compared with January. Supply chains also continued to face disruption, with longer delivery times linked to courier shortages and congestion at Dublin Port.
Despite these pressures, construction firms remain broadly positive about the outlook for the year ahead. Confidence about future activity levels remains elevated, although sentiment softened slightly compared with the previous month.
