Commercial Construction Ireland: Output Falls 18% in Q2

Geoff O'Brien Facilities
September 3, 2026

While the Q2 figures paint a challenging picture, more recent data suggests the industry may already be recovering.

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Key takeaways

Non-residential construction output in Ireland fell 18% year-on-year in Q2 2026.
Residential building activity rose 12.6% over the same period, and 5.5% quarter-on-quarter.
Overall construction volume grew just 0.4% on the quarter and was down 3.4% year-on-year.
The AIB Construction PMI rebounded to 53.0 in July, with commercial construction leading at 53.6.

Ireland’s latest construction figures tell two different stories. On one side, the sector is making headway into the residential housing demand faced around the country. On the other, the figures show a fall in recent non-residential construction. So are the buildings and spaces used by businesses, organisations and industries creating an industry gap that is difficult to ignore? For anyone working in commercial construction in Ireland, the Q2 2026 data is worth a closer look.

What the CSO’s Q2 2026 construction figures show

New data published by the Central Statistics Office (CSO) on 26 August 2026 states that the overall volume of construction activity across the country rose by just 0.4% in Q2 2026 compared with Q1. But if you look beyond this headline figure, a much bigger divide begins to emerge.

Sector	Q2 2026 vs Q1 2026	Q2 2026 vs Q2 2025
Residential building	+5.5%	+12.6%
Non-residential building	−9.7%	−18.0%
Civil engineering	+3.1%	—
All construction	+0.4%	−3.4%

Source: CSO Production in Building and Construction Index, Q2 2026 (provisional).

There’s no need to panic yet. This doesn’t necessarily mean Ireland’s commercial construction sector is entering a long-term decline, and the CSO itself notes that quarterly construction series can show considerable volatility. But an 18% annual fall in non-residential output is difficult to ignore.

It’s worth being clear about what these figures do and don’t show. They don’t tell us that demand for new commercial buildings has permanently fallen, and they don’t prove that Ireland is entering a prolonged commercial downturn. That distinction matters whenever quarterly data is being interpreted.

What makes the latest figures particularly interesting is understanding where Ireland’s non-residential decline has come from.

Why non-residential construction output fell

The decline recorded for Q2 2026 follows a much stronger period for the sector. Across 2025, non-residential construction volume actually increased by 13.3% compared with 2024, while overall construction activity increased by 6.9%. Rather than continuing that growth, the sector entered 2026 on a noticeably different trajectory.

So what changed?

The CSO figures themselves don’t identify one specific cause for the decline, but other industry data from Q2 points to a challenging environment for construction companies.

In April, the AIB Construction PMI recorded a fall in new orders for the first time in five months, with some businesses reporting that projects had been put on hold amid uncertainty and rising costs. Commercial construction was still growing, but at its slowest rate in three months. Confidence across the construction sector was at its lowest in almost three and a half years. Cost pressure remained a recurring issue, with the Construction Industry Federation’s Q2 outlook pointing to continued increases in labour and material costs.

By June, conditions had weakened further. The AIB Construction PMI fell from 50.2 in May to 45.4 in June, with readings below 50 indicating contraction. Commercial construction, which had been on a trajectory of expansion, also moved into contraction. New orders declined, and customers deterred by high pricing were refusing to commit to new projects.

Supply chains created additional pressure, with construction firms reporting longer delivery times during June linked to shipping disruption and shortages, while prices for oil and raw materials remained elevated.

Taken together, the picture comes into focus: strong growth in 2025 was followed by rising costs, weaker new orders, increased uncertainty and delayed projects. That provides important context for understanding why 2026 has, so far, looked very different from the year before.

Is Ireland’s commercial construction already recovering?

While the Q2 figures paint a challenging picture, more recent data suggests the industry may already be recovering.

The AIB Construction PMI for July 2026 recorded a notable rebound in activity immediately following the end of the CSO’s Q2 reporting period. Ireland’s overall construction PMI climbed from 45.4 in June to 53.0 in July, breaking out of the contraction band and firmly into growth. Commercial construction led the increase, recording a PMI of 53.6. Civil engineering followed at 51.7, while housing returned to modest growth at 50.5. Construction employment rose for the ninth consecutive month, and new orders increased for the first time in three months.

So has commercial construction already turned a corner? It’s simply too early to tell.

Whether July marks the beginning of a sustained recovery for commercial construction remains to be seen. The Q2 figures are significant and paint a difficult picture for the sector, but looking back at the previous direction of travel makes the case more complicated. Across 2025, non-residential construction volumes increased by 13.3% on 2024 — yet the CSO’s quarterly data shows that growth wasn’t as consistent as the annual figure suggests. Non-residential output rose strongly during parts of 2024 and 2025 before beginning to fall again later in the year.

And now the first industry indicator after the Q2 period is pointing in the opposite direction again. Rather than a simple story of growth turning into decline, or vice versa, the evidence points towards a market experiencing repeated shifts in momentum.

An 18% annual decline should by no means be dismissed. But neither should one quarter be used to determine the long-term trajectory of the sector. With July showing signs of renewed commercial activity, the next few months of data will be vital in determining where things are heading.

Why this matters beyond the construction industry

The significance of these figures doesn’t end with construction companies.

Non-residential construction ultimately delivers the educational buildings, offices, commercial premises, industrial facilities and other workplaces that Irish businesses and organisations depend on daily.

Ireland’s built environment has to perform long after the initial construction is complete. Buildings need to accommodate the organisations using them, respond to changing operational requirements, and remain functional and safe throughout their working lives. What gets constructed today becomes part of the building stock that businesses, facilities professionals and property teams will be responsible for managing tomorrow.

Changes in commercial construction aren’t only relevant to developers and contractors. They shape the operation and management of facilities for years to come.

What to watch next in Irish commercial construction

Because Q2 alone doesn’t give enough evidence to call this a long-term decline, the next few months of data become particularly important.

One of the clearest indicators will be the CSO’s Q3 construction index. By the end of Q3 we’ll be able to see whether the fall in non-residential output recorded during Q2 continues, stabilises, or returns to growth. In the meantime, AIB’s monthly Construction PMI will give a read on current conditions. Commercial construction returned to expansion in July, but one month of growth isn’t enough to establish a trend — whether commercial activity stays above 50 is the thing to watch.

Cost is another part of the picture. The CIF’s Q2 construction outlook pointed to continued pressure from material costs, meaning the direction of input prices could significantly influence businesses’ ability to commit to future projects. That runs parallel with new orders: sustained improvement there would strengthen the case that demand is genuinely returning.

No single indicator is the answer. But taken together, output, new orders, commercial activity and costs should tell us considerably more about whether Q2 was a temporary setback or the start of a broader shift.

A sector worth watching

Ireland’s Q2 2026 construction figures deserve attention. An 18% annual fall in non-residential construction output is significant, especially as it follows 13.3% growth the year before. But it isn’t the whole story. July’s return to expansion in the construction PMI is an early indication that conditions may be improving. It isn’t enough to declare a recovery — but equally, one poor quarter isn’t enough to declare a long-term downturn.

The coming months should give a clearer picture of whether Q2’s data reflects a trend or simply a fluctuation. For anyone working across Ireland’s construction, facilities management and property sectors, it’s a development worth watching closely.

Frequently asked questions

Why did Ireland’s non-residential construction output fall in 2026?

The CSO doesn’t attribute the fall to a single cause. Industry data from the same period points to rising labour and material costs, weaker new orders, low sector confidence, and projects being delayed or put on hold amid economic uncertainty.

How much did commercial construction fall in Q2 2026?

Non-residential building output fell 9.7% compared with Q1 2026 and 18% compared with Q2 2025, according to the CSO’s Production in Building and Construction Index.

Is Irish construction growing or shrinking overall?

It depends on the sector. Overall construction volume rose 0.4% quarter-on-quarter but fell 3.4% year-on-year in Q2 2026. Residential building grew 12.6% year-on-year, while non-residential fell 18%.

What is the AIB Construction PMI telling us now?

The index rose from 45.4 in June to 53.0 in July 2026, moving from contraction into growth. Commercial construction led at 53.6, though one month isn’t enough to confirm a sustained recovery.