The Survey: What the Construction Industry Is Actually Telling Us
The Construction Industry Federation's Q2 2026 Outlook Survey, based on responses from 138 construction companies across Ireland, paints an honest picture of an industry holding its nerve under real pressure. The headline finding is stark: 94% of firms reported increases in raw material costs during Q1 2026, and 96% expect further increases in Q2. Labour costs are climbing too, with 74% of companies reporting year-on-year rises and 66% expecting further increases in the months ahead. As a direct result, two-thirds of firms increased their pricing for projects during Q1 2026, with 72% expecting to push prices higher still into Q2.
To understand the significance of those numbers, it helps to place them in context. At this time last year, the cost trajectory was still relatively manageable. The Q1 2026 survey is the third consecutive quarter in which material cost inflation has either held at elevated levels or worsened, and the 94% figure, meaning virtually every firm in the survey reporting increased materials costs, is one of the highest readings the CIF has recorded in recent years. Ireland currently has a €102.4 billion National Development Plan allocation running from 2026 to 2030, covering roads, housing, schools, hospitals, public transport and utilities. The CIF has been direct about what cost pressures mean in that context: without stable, traceable project pipelines and procurement reform, rising costs will simply absorb more of that €102.4 billion without delivering a proportional increase in completed buildings.
Where the Costs Are Coming From
The construction sector's current cost pressure isn't the same as the commodity crisis of 2021 and 2022, when pandemic-era supply chain disruptions drove steel, timber, copper and concrete prices into sudden, extreme territory. This is more persistent and structural. Materials like structural steel, cement, insulation products and engineered timber have all seen sustained price pressure driven by a combination of stronger-than-expected European construction demand in 2025, ongoing energy costs flowing through manufacturing processes, and the residual effects of global supply chain rebalancing post-pandemic. Ireland is also increasingly feeling the downstream effects of international trade policy shifts: while Irish construction doesn't buy directly from the US, the tariff environment affecting US construction imports from Asia and Europe is already pushing some global material prices upward, with Ireland as a price-taker in these commodity markets rather than a price-setter.
Labour is the second major pressure point, and it has a distinctly domestic dimension. The construction workforce in Ireland is effectively full employment, with demand for skilled trades, particularly electricians, plumbers, carpenters and groundworkers, running well ahead of supply in most regions. Wages in the sector have been rising steadily, and the expected further tightening of the labour market through 2026, as major NDP projects like the National Children's Hospital final fit-out and the roll-out of surgical hubs across Cork, Galway, Waterford, Limerick, North Dublin, Sligo and Letterkenny all compete for the same pool of workers, means that 66% expecting further labour cost increases is a conservative reading rather than a pessimistic one.
Who's Growing and Where Activity Is Concentrated
The picture isn't uniformly difficult, and it's worth being precise about where the growth is actually sitting. Within the broad construction sector, Civil Engineering and Specialist Contracting recorded the strongest annual growth in Q1. Home Building also showed solid momentum, particularly among smaller firms, as the housing pipeline activated by various schemes and council-led developments pushed residential output higher. Commercial and office construction is more subdued, reflecting a continued recalibration of demand post-pandemic and a more cautious approach from private developers watching the financing environment.
Business confidence is also improving, if modestly. A quarter of firms reported year-on-year turnover growth in Q1 2026, and 36% expect turnover to increase in Q2. Export activity remains positive, with most firms that export reporting increased international turnover. For an industry that has historically been almost exclusively domestic, the growth in Irish-headquartered contractors winning work in Britain, Europe and further afield is a meaningful structural shift, and it matters for the domestic market because it gives firms a buffer when local conditions tighten.
What This Means If You're Not in Construction
The reason this survey matters well beyond the construction sector is that virtually every business investing in any kind of physical premises, fit-out, expansion, or infrastructure upgrade is exposed to what it's describing. If you're planning a new commercial fit-out, office refurbishment, restaurant build-out, hotel upgrade, or any kind of capital project in 2026 or 2027, the pricing you were quoted six months ago is very likely stale. The 72% of contractors expecting to raise prices again in Q2 means project costs are still moving upward right now, not stabilising. Getting fresh quotes, locking in contractor agreements earlier rather than later, and building contingency buffers into capital budgets is not optional planning, it's essential given where the data is pointing.
There's also a planning and sequencing dimension. Major public projects under the NDP are absorbing significant contractor capacity, and the CIF has flagged that a material share of member firms are not currently engaged with public works contracts at all, citing concerns around margins and procurement complexity. For private sector clients competing for the same contractor pool, the lesson is simple: the earlier and more clearly you can specify your project, the better your position in a market where good contractors have more work than they can take.
The Bottom Line
Ireland's construction sector is broadly stable but under real cost pressure, with material and labour costs both rising across almost the entire industry. For any business planning capital investment or building work in 2026 or 2027, the message from the CIF's latest data is clear: expect costs to keep moving, lock in your contractor relationships early, and build contingency into your budgets now rather than after your first quote comes in.
Business Pulse — Ireland's home for business intelligence, analysis and thought leadership. Subscribe to the Business Pulse Network Briefing.