Industry executives retain confidence in industry growth

According to the latest report from Timetric’s Construction Intelligence Centre (CIC), construction industry executives continue to be confident about the prospects for growth in the industry and for their companies over the next six months. However, confidence levels have been in decline since late 2014, and this trend continued into the early part on 2016.

In the 1Q16 update of the Construction Confidence Survey, the Current Confidence Index (CCI) score dropped to 61.2 points, down from 61.5 points in 4Q15. This marked the fifth successive quarter of decline in the CCI. However, with the score still above the 50-point mark, there remains a good level of optimism regarding the prospects for growth in the coming six months.

Although improving, the global economy is set to remain sluggish in 2016 and it is providing little support for the global construction industry, according to the Economic Impact Index (EII), which dropped to 44.0 points in 1Q16. The global score for the EII, which provides a view of how respondents perceive the current state of the economy to be impacting the construction industry, has fallen over the past two quarters, from 45.2 points in Q4 2015 and 46.7 points in 3Q15.

“This suggests that on balance the industry is struggling to generate growth momentum in the face of economic weakness in key markets around the world. Out of the eight major regions covered in the EII, the regional economy in Asia is having the most favourable impact on construction activity,” comments Danny Richards, Lead Economist at Timetric’s CIC.

The EII score for Asia in 1Q16 stood at 56.6 (with a score above 50 implying the economy is having a favourable impact on the construction industry). This reflects the relatively fast pace of economic expansion in the region’s dynamic emerging markets.

“However, the EII for Asia has been on a general declining trend for the past six quarters, an outturn that is in line with the growing anxiety over the state of China’s economy and the sharp slowdown in construction activity in the region’s largest economy,” says Richards.

The Middle East and Africa had the lowest EII scores in 1Q16, at 44.1 and 41.8, respectively. The continued weakness in oil prices has been clearly reflected in the further drop in the EII for the Middle East. Although the fiscal reserves held by the governments in most of the key markets in the region remain high, public investment is being scaled back and construction projects are being put on hold.

In Africa, low prices for oil and other commodities have curtailed investment growth in a number of major economies in the region, while the slowdown in China is raising concerns over the potential for a drop in foreign investment and aid. Economic policy mismanagement and operational risks also continue to undermine investor confidence. The EII was above the 50-point mark in North America, Western Europe and Australasia in the Q1 2016 survey update, but was sub-50 in Eastern Europe and Latin America, with these regions’ largest markets, Russia and Brazil, both having construction industries that are contracting.

Adapted from press release by Rebecca Bowden

Read the article online at: https://www.worldcement.com/the-americas/16052016/industry-executives-retain-confidence-in-industry-growth-108/