Upturn in EU construction sector activity

Source:
ITTO/Fordaq
Views:
1753
  • text size

The Eurostat Construction Production Index shows that EU construction sector activity turned upward in the last quarter of 2015 and the rising trend continued into the first quarter of 2016. Strong growth in activity in Germany, Netherlands, and Spain offset weakening activity in the UK and Poland. Activity in France and Belgium remained flat during this period. Activity in Italy remains at a very low level but there were some minor gains in the last quarter of 2016.

Further insight into the EU construction market is provided by the 2015 European Architectural Barometer report published by independent research agency Archvision in March 2016 based on a survey of 1,600 architects in eight European countries.

The order books, turnover and perceptions of European architects provide a leading indicator for construction activity. The survey indicates slow but consistent growth in European construction activity in 2015 with faster recovery expected in 2016 and 2017.

Key conclusions for each of the eight countries are as follows:

  • Construction activity in Belgium has been improving slowly and consistently since the end of 2014. Architects order books and turnover were higher in 2015 than in 2014. Building permits for both residential and non-residential construction increased in 2015 after falling in 2014. The construction confidence indicator improved in the last quarter of 2015. Achi-Vision forecasts solid growth in Belgian construction activity of 2% in 2016, a rate expected to continue into 2017.
  • In France the construction sector is still in recession but slowly improving. In the last quarter of 2015 architects order books grew for the first time since the first quarter of 2011. Architects turnover is also stabilizing. The Eurostat construction confidence and building permits indicators have improved slightly. ArchVision predict that construction activity in France will decline 2% in 2016 before stabilising in 2017 and recovery from 2018 onwards.
  • In Germany, confidence amongst architects has been rising steadily over the last 4 years against a background of gradually improving order books. The level of building permits for both residential and non-residential construction was very stable throughout the years 2014 and 2015 suggesting continuing improvement. There is good demand for housing and macroeconomic forecasts are quite positive. But while construction confidence is increasing, confidence in other industry sectors and amongst consumers is lagging in Germany. Arch-Vision expects 2% growth in German construction in 2016.
  • The construction market in Italy remains the worst performing in Europe, although it is beginning to stabilise and should start to recover in 2017. Architects order books and turnover continue to decline but the rate of fall slowed in the second half of 2015. Building permits and construction confidence indicators are declining but at a slower rate. Arch-Vision predicts a further 2% decline Italian construction activity in 2016 with the possibility of stabilisation in 2017.
  • The Netherlands construction sector grew more rapidly than elsewhere in Europe in 2015 and growth is expected to remain at a high pace in 2016 and 2017. Dutch architects’ order books and turnover are at their highest level since 2011. The Eurostat construction confidence indicator increased rapidly and continuously between the end of 2012 and end of 2015. However it stumbled a little at the end of last year on news of a decrease for in building permits for both residential and non-residential construction. Nevertheless Arch-Vision predicts that construction activity will increase 4% in 2016 and that this rate will continue or even strengthen in 2017.
  • Construction activity in Poland, the largest Eastern European economy, remains relatively high. The Eurostat construction production index suggests some decline in construction activity in the last three quarters of 2015, a trend which continued into the first quarter of 2016. However according to Arch-Vision, architects order books and turnover have continued to rise slowly throughout this period. Arch-Vision expects Polish construction activity to expand 2% in 2016 and this rate to be maintained in 2017.
  • Although still well below pre-crises levels, construction activity in Spain continues to recover. Architects order books and turnover were rising in the last quarter of 2015. Despite some fluctuation, residential building permits seem to be slowly recovering while permits for non-residential construction increased rapidly in 2015. The Eurostat construction confidence indicator is still in negative territory and fell at the beginning of 2016, but after big gains in 2015 is still significantly higher than two years ago. Arch-Vision predict 4% growth in Spanish construction activity in 2016, possibly rising to 5% in 2017.
  • The UK construction market continues to improve but the increase has become less consistent. Building permits for new residential construction were rising in 2014 and the first quarter of 2015 but weakened in the second half of the year. Confidence indicators have also been more variable in the UK. Nevertheless confidence within architectural firms was still good in the last quarter of 2015 and order books and turnover development was quite positive. The latest British Woodworking Federation quarterly report showed that while the first quarter of 2016 was a testing time for many joinery manufacturers, most were confident of rising sales in the second quarter. Arch-Vision predicts growth of the overall UK construction market of 3% in 2016.
Post comment