A slowdown in the number of new houses being built will lead to 35,000 job losses in the construction industry by the end of next year, according to a new report by Davy Stockbrokers.
It says the housing sector is on the brink of a significant adjustment, with the number of housing completions likely to fall in the second half of the year.
Although there will be some redeployment to other healthier parts of the construction industry, it is "inevitable" that there will be job losses, Davy economist Robbie Kelleher said yesterday.
The numbers of workers employed in housing will fall from around 185,000 to 150,000 by the end of 2008, the broker said. However, this will be partially offset by increased activity in other sectors of the construction industry, where Davy estimates an additional 17,000 people will be employed over the same period.
That would leave a net job loss of around 17,000, or 6 per cent, between now and the end of 2008.
Around 13 per cent of the construction workforce is made up of foreign nationals, who are considered more mobile than other construction workers. A portion of this group may relocate to Britain, where an extensive construction programme linked to the 2012 Olympics is getting under way.
Davy, which is more pessimistic about the economy than other forecasters, has published its report in the last week of activity in the housing sector before the traditional builders' August holidays.
"Builders' holidays start at close of business on Friday and we reckon their holidays might be a bit longer this year. There are a lot of people who won't be employed when the sites open, or rather when the sites don't open, in September."
Some people in the construction industry have dubbed the day "Black Friday" in the belief that construction firms will use the break to let staff go.
The number of housing starts has fallen dramatically this year, dropping 34 per cent in the first six months of 2007 and dipping sharply in June. Housing completions are still increasing on an annualised basis, but Mr Kelleher attributed this to a nine-month lag between housing starts and completions.
Davy predicts that the number of completions will fall off by 17 per cent in the second half of 2007. But he stressed that Davy's forecast of 80,000 house completions for this year and 65,000 next year was still a soft landing.
Increased levels of public sector construction under the National Development Plan, a buoyant commercial sector and a surge in home improvement will help counterbalance the downturn in housing, Davy says.
The commercial, infrastructure and home improvement sectors account for up to 40 per cent of construction investment, the broker notes.
However, Davy expects that employment in the construction sector as a whole will be falling at a year-on-year rate of 6 per cent by the end of 2008.
Overall job creation in the economy is likely to slow to 1 per cent by the end of 2008, which is the equivalent of 20,000 jobs. This is down from a figure of 80,000 in the 12-month period to the end of February 2007.
Unemployment could reach 6 per cent by the end of next year, Davy suggests, an increase on the projected rate of 4.6 per cent for 2007.
The Construction Industry Federation (CIF) said yesterday that it was impossible to predict the number of job losses that might happen in the industry.
CIF head of public affairs Martin Whelan said there was strong labour mobility in the construction sector, with workers easily able to shift from the housing sector into other areas of the construction industry.
"I think generally there is a bit of hyping about a downturn in the market," Mr Whelan said. There would continue to be strong demand for houses due to population growth, he added.
"Ireland is still building more houses than anyone in Europe per one thousand of population."
