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Industrial activity in the EU

World Cement,

Read part one here

Industrial activity

4Q14 industrial activity in the EU remained around the levels observed in the previous quarter. Industrial production recovered only in Germany, and fell in other major manufacturing countries, albeit at moderate rates. However, the general subdued trend in industrial activity recorded in 4Q is expected to return to recovery in 1Q15 as a result of the improved macroeconomic conditions in the EU.

Leading indicators for construction activity in 4Q14 continued to move around low levels in historical terms, with the exception of Germany. Construction fell to further record lows in France and Italy in particular. On the other hand, the latest data signals improved conditions for the residential subsector, particularly in Spain, due to the pronounced and continued fall in house prices, which has improved affordability for households. Equally, civil engineering recorded very positive performances in Spain and Germany.

Cement manufacturing production indices in 4Q14 remained around record lows across the EU, with the exception of Germany where the quarter-on-quarter rebound was significant. Cement manufacturing activity proved stable in the EU and Spain, while it continued to record negative quarterly developments in Italy and France.

CEMBUREAU’s broad forecasts for the construction and cement sectors in 2015 (based on available leading indicators and Euroconstruct data) foresee recovery in construction activity in most markets. The main reasons are the upturn in the residential subsector due to rising housing demand, interest rates at record lows boosting private non-residential, and momentum for moderate fiscal expansion in certain EU Member States as a result of improved macroeconomic conditions and the expected effects of the ECB’s APP. According to the latest leading indicators available, construction markets and, in turn, cement demand are expected to gain some momentum and to experience a more positive cycle as the worst years of the construction crisis (2012 – 2013) have passed. The European Commission foresees a substantial recovery in real construction investment in many Member States, mainly Spain, Portugal and some Eastern European countries that were affected by the fall in the construction cycle after the 2008 crisis, but not in Italy and France where the construction sector recession is expected to continue, albeit slowing down.

This is part two of a two-part report. Written by Cembureau and adapted to World Cement's house style. The full report can be downloaded here.

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