Construction activity remained below pre-Covid levels for the second consecutive month as monthly production fell 1.6% in July, according to latest figures from the National Statistics Office.
The ONS said anecdotal evidence from companies suggests the main reasons for the decline were price increases and product shortages due to supply chain issues.
Construction output in July was 1.8% (£ 257mn) below pre-February 2020 pandemic levels.
Both new and repair and maintenance work contributed to the decline, the former down 3.2% from February 2020, the latter down 0.6%.
Mark Robinson, Scape’s Group Chief Executive, said: “The first significant drop in construction output should come as no surprise given the ongoing impact of material and labor shortages over the past few weeks.
“A stronger cooperation between clients and contractors will continue to be of central importance. This also includes obliging large contractors to fair payment practices, which boosts cash flow for SMEs and relieves smaller suppliers. “
Infrastructure was the best performing sector during the pandemic with 35.7% or € 649 million.
Monthly construction output fell by 1.6% in terms of volume in July, as new construction fell by 1.1% and 2.4% respectively.
The decrease in monthly production was mainly due to private housing construction, which saw both new work and repair and maintenance decrease by 7.5% and 6.2%, respectively. The ONS said this was due to price increases likely caused by product shortages.
Clive Docwra, managing director of McBains, said the issues were not related to market confidence but rather to material shortages, particularly imported wood, which has increased more than 60% in the last year.
He said: “Price increases can already be seen in the most recent tender returns, which in turn could increase inflationary pressures.”
In addition to the monthly decline, construction output fell by 0.6% in volume in the three months to July, the first three-month decline since February 2021, driven by a 2.9% decline in repairs and maintenance.
The decrease in repairs and maintenance was mainly due to an 8.3% decrease in home repairs and maintenance.
Docwra said: “Private housing and repair and maintenance have been responsible for an increase in production over the past few months, but these sectors in particular are in high demand and this is reflected in the £ 217 million decrease in new private housing work at least 110 million pounds are paid for repair and maintenance work. “
In the three months to July, new employment rose 0.7%, with infrastructure and, to a lesser extent, private industrial sectors making the largest contribution to this growth, growing 17.5% and 8.2% respectively.