The construction industry in Jamaica has continued to face challenges, with a third consecutive quarterly decline reported for the April to June quarter. Preliminary data released by the Planning Institution of Jamaica (PIOJ) indicated a contraction of 2.4 per cent in the sector during this period.
The lower output was primarily attributed to reduced activities in both the ‘Building Construction’ and ‘Other Construction’ subsectors. Housing construction declined, and recent road projects came to an end, leading to a decrease in real value added for construction. Dr. Wayne Henry, Director General of PIOJ, highlighted that the decline in the ‘Other Construction’ component was a result of reduced capital expenditure on civil engineering activities, while the building component contracted due to a 7.6 per cent decline in housing starts by the National Housing Trust (NHT).
Agency spending also played a role in the reduced output, with agencies like the National Works Agency (NWA) and the Jamaica Public Service (JPS) reporting declines in expenditure. However, increased expenditure by the National Road Operating and Construction Limited (NROCC) on the Montego Bay perimeter road helped offset some of the decline in the ‘Other Construction’ segment.
The construction industry has experienced mixed performance over the last four quarters, with fluctuations in growth and decline. The slowdown in residential and commercial real estate projects by private developers, coupled with higher interest rates in the market, has contributed to the industry’s challenges. However, there is optimism for a rebound in the industry as it enters the peak season.
The PIOJ anticipates a return to growth for the construction industry in the latter part of the 2024/25 fiscal year, driven by increased rebuilding and repair activities associated with recovery from Hurricane Beryl and the ramping up of activities under the Relief Emergency Assistance and Community Help (REACH) road rehabilitation program.
While the goods producing industry, which includes construction, grew marginally at 0.8 per cent, the services industry saw smaller output growth of 0.1 per cent. Despite challenges faced by the construction industry, the overall economy for the April-June quarter remained relatively flat, with a growth estimate of 0.1 per cent compared to the corresponding quarter in 2023.
Looking ahead, the PIOJ has projected negative growth for the current July-September quarter, mainly due to fallout from Hurricane Beryl impacting parishes along the island’s southern coast. The economy is expected to contract within the range of -0.1 per cent to -1.0 per cent for this period, with a GDP change projection of -1.0 per cent to 1.0 per cent for the fiscal year.
Despite the challenges and projected negative growth, there remains optimism for the construction industry’s recovery as efforts continue to monitor and assess developments in the sector.
