The Irish construction industry is currently operating at roughly 77% capacity, despite high demand for new housing and infrastructure projects, according to Turner & Townsend's latest Construction Market Overview, covering July to September.
The report shows that 78% of industry respondents reported stability in market conditions over the period, with only 11% perceiving a slowdown and another 11% noting sector growth.
A primary factor behind this capacity gap is the shortage of skilled labor, exacerbated by lingering effects of the COVID-19 pandemic and ongoing geopolitical disruptions, which have delayed the return of skilled workers.
Additionally, escalating material costs and workforce shortages are creating structural barriers to expansion.
Housing remains the strongest-performing sector, with private housing developments outpacing public sector projects.
However, the industry faces challenges with extended project timelines, attributed to skilled labor shortages, with two-thirds of respondents indicating increased program lengths. Government regulations and red tape are also seen as obstacles, while concrete costs increased by 9% in the last quarter.
Labor shortages and skills gaps are contributing to rising construction costs, with labor expenses increasing by approximately 5%. Material costs also continue to climb, with 67% of industry respondents noting a slight rise over the past three months.
Looking forward, contractors anticipate tender price inflation at 3.3% for this year, rising to 3.6% next year and moderating to 2.8% by the following year.
Order books reflect steady demand, with contractors reporting they are 76% full into 2024 and 44% booked for 2025-2026. The report concludes that addressing labor shortages, simplifying processes, embracing sustainability, and adapting to market shifts will be crucial to overcoming these challenges in the Irish construction sector.
Source: Media