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The latest construction Purchasing Managers' Index shows a mild expansion in August, with residential and civil engineering projects contracting, while commercial work remains modestly positive. Higher input costs and supply‑chain delays are slowing activity, but employment keeps rising at a modest pace.
In August, the National Association for Industry and Business reported that its monthly index for construction became only a 10‑month low, reflecting a slowdown in construction activity across the country.
While still technically above the neutral 50‑point threshold, the values dropped from 53.0 in July to 50.7 in August, signalling that the rate of growth this month was markedly slower than it had been in the early part of the year. The index, which is compiled from a survey of approximately 150 firms, measures changes in the volume of construction work undertaken nationally from month to month.
A breakdown of the data shows that residential construction Companies were unable to maintain their July momentum and slipped into contraction territory, recording a firm‑level index reading of 46.9. In contrast, commercial construction remained the only segment of the sector to register growth, scoring a 51.4, which still places it as the strongest performer in the field.
Civil engineering activities-including government‑backed projects such as water supply networks, electricity grids, roads and public housing-registered a near‑neutral reading of 49.9, just below the break‑even benchmark. The New Orders sub‑index, which is regarded as a forward‑looking gauge of future activity, rose for the second month in a row, illustrating that firms are still optimistic about the pace of new work.
Staffing levels across the industry also climbed for the tenth consecutive month, although the lift was the slowest since November 2025. The report highlights a number of supply‑chain challenges that may be contributing to the slowdown. Construction firms are facing escalating input costs, especially for raw materials such as oil and metals.
As a result, inflation in the sector ticked up from July, though it remains far below the peak rates recorded in April. Senior economist John Fahy noted that the sector has seen increased workloads and the inception of new projects, which are driving both employment and purchasing activity up.
Nevertheless, the board of the association remains cautious, urging a firm stance on the state‑level carbon tax as a means to protect the most vulnerable segments of the economy. The overall picture emerging from the Index is one of modest growth but underlying vulnerabilities. Although construction output is still expanding, the slowing growth rate reflects both supply‑chain delays and higher costs that are pushing construction firms to operate on tighter margins.
While the optimistic tone of the New Orders and employment data suggests that firms are still preparing for future activity, the decline in residential construction points toward an area that requires policy intervention to sustain stability across the sector.
Construction Industry Purchase Managers Index Employment Growth Input Costs Job Creation
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