Category Archives: Irish construction activity

18/2/20: Irish Statistics: Fake News and Housing Markets

My latest column for The Currency covers the less-public stats behind the Irish housing markets:

Key takeaways:
"Irish voters cast a protest vote against the parties that led the government over the last eight years – a vote that just might be divorced from ideological preferences for overarching policy philosophy."

"The drivers of this protest vote have been predominantly based on voters’ understanding of the socio-economic reality that is totally at odds with the official statistics. In a way, Irish voters have chosen not to trust the so-called fake data coming out of the mainstream, pro-government analysis and media. The fact that this has happened during the time when the Irish economy is commonly presented as being in rude health, with low unemployment, rapid headline growth figures and healthy demographics is not the bug, but a central feature of Ireland’s political system."

Stay tuned for subsequent analysis of other economic statistics for Ireland in the next article.

8/8/19: Irish New Housing Markets Continue to Underperform

New stats for new dwelling completions in Ireland are out today and the reading press releases on the subject starts sounding like things are getting boomier. Year on year, single dwellings completions are up 15.5% in 2Q 2019, scheme units completions up 2.6%, apartments up 55.6% and all units numbers are up 11.8%. Happy times, as some would say. Alas, sayin ain't doin. And there is a lot of the latter left ahead.

Annualised (seasonally-adjusted) data suggests 2019 full year output will be around 18,000-18,050 units, which is below the unambitious (conservative) target of 25,000. And this adds to the already massive shortage of new completions over the last eleven years. Using data from CSO (2011-present), cumulated shortfall of new dwellings completions through December 2018 was 125,800-153,500 units (depending on target for annual completions set, with the first number representing 25K units per annum target, and the second number referencing target of 25K in 2011, rising to 30K in 2016 and staying at 30K through 2019). By the end of this year, based on annualised estimates, the shortfall will be 132,400-162,250 units. Taking occupancy at 2.1 persons per dwelling, this means some 278,000-341,000 people will be shortchanged out of purchasing or renting accommodation at the start of 2020.

Here is a chart summarising the stats:

Let's put the headline numbers into perspective: at the current 'improved' construction supply levels (using annualised 2019 figure), it will take us between 6.3 and 7.7 years to erase the already accumulated gap in demand. If output of new dwellings continues to grow at 11.8% per annum indefinitely, Irish construction sector will be able to close the cumulative gap between supply and demand by around 2029 in case of the targeted output at 25K units per annum, or worse, by 2031 for the output target of 30K units per annum.

15/5/15: Irish Construction PMI: April Stronger PMI, but Overall Activity is Weak

Irish Construction Sector PMI for April was released by Markit earlier this week. Here are the main points:

Overall Activity Index in Irish construction rose to 57.2 in April from 52.9 in March, bringing index back to the levels of January 2015. Current 3mo average is at 54.0 against 3mo average through January 2015 at 61.2, showing a clear slowdown in activity growth over most recent three months.

All three components of the index posted increases in April, with Civil engineering Activity index reaching above 50 marker (to read 51.0) for the first time since January 2015.

It is worth noting that Construction Sector PMIs have been pretty much out of touch with actual construction sector activity. Current readings on PMIs side signal blistering growth in activity and this is sustained, on average from the start of Q2 2013. Yet, Irish construction sector remains the second worst performing sector in the EU since the start of the crisis:

You can see the disconnection between PMIs (these are quarterly averages) and Construction sector actual performance setting in post Q2 2013 here:

10/4/15: Irish Construction Sector Performance: a European Perspective

Irish Construction Sector has been a positive contributor to GDP over the second half of 2014, prompting some - in fact many - media outlets to herald the return of the Men in Hard Hats. You can be excused for wondering, as to how many men (and women) in hard hats are out there working today, given there is little visible activity on the ground, but the numbers do not lie. Or so they say.

Here is the latest data from the Eurostat giving construction sector activity in terms comparable across the EU states.

Actual activity for all building and construction sectors in Ireland over Q4 2014 was running some 53.2% below the average activity levels recorded in 2000-2002. Over the course of 2014, average activity in the sector in Ireland was 53.2% below the same activity over 2000-2002. Both metrics ranked Ireland as the third worst-performing construction sector in the group of euro area 15 economies.

Having risen to 111.20 in Q4 2010, the index of overall construction activity in Ireland was at the highest level since Q4 2009, but below any quarter for the period of Q1 2000-Q4 2009.

Things are even worse in the case of building activity (ex-civil engineering), where Ireland ranks second worst, on par with Portugal in the EU28. Here, Q4 2014 reading is 63.5% below 2000-2002 average and full year 2014 average reading is 69% lower than 2000-2002 average. Once again, the index is currently reading at the highest level since Q4 2009, but as above, this reading is well below any quarterly reading between Q1 2000 and Q4 2009.

Here is a chart showing relative performance to EU and EA:

Two things to note in the above:

  1. EU and EA uplift in Q4 2014 has been more pronounced than that for Ireland. 
  2. The trends are now not exactly converging, with EU and EA both pushing up, while Ireland's upward momentum appearing to be weakening once again from H1 2014 on.
One aside question is: with the above evidence at hand, can anyone explain a huge rise in the reported 'investment' in commercial property in 2014? Other than buy-to-flip strategies of the vulture funds, where is all this 'investment' going?