Confidence in the global construction industry is picking up
Confidence levels among construction industry executives picked up in the last quarter of 2016, according to the latest update of Timetric’s Construction Confidence Survey.
Having declined for six successive quarters, confidence levels improved marginally in Q3 2016 before posting a sharper upturn in Q4 2016, with the Construction Confidence Index (CCI) reaching 63.2 points. The CCI score remains comfortably above the 50-point mark, showing that industry executives are optimistic about growth prospects in the coming six months, albeit not yet returning to the highs recorded in 2014.
Current Confidence Index
Note: Index >50 implies responents are optimsitic about growth prospects; index <50 implies respondents are pessimistic about growth prospects; index =50 implies respondents are neither optimisitc or pessimistic.
The Economic Impact Index (EII) for all regions continued to recover from a low of 42.2 in Q2 2016 to reach 49.0 in Q4 2016. A number of major economies that traditionally rely on oil revenue continue to be impacted by low oil prices, despite a slight upturn in prices towards the end of 2016. Nigeria, the largest economy in Africa, is currently enduring a recession brought on by a reduction in oil prices while numerous countries in the Middle East have introduced austerity measures to combat fiscal deficits incurred through falling oil revenue.
The EII showed improvements in every region except South America, suggesting generally renewed optimism among respondents. The South American region continues to feel the effects of recessions in Brazil and Venezuela. The EII for North America rose to 55.7 following a sustained period of reduction since Q2 2015. The election victory for Donald Trump has boosted construction prospects due to his focus on large-scale infrastructure investment to boost growth and create jobs. The EII for Asia picked up from 55.4 to 58.6 over Q4 2016. Economic growth is high in India despite a cash shortage brought on by a demonetization program, and China has also demonstrated solid growth despite a slight slowdown.
In terms of the leading indicators analysed in the survey, both sales and headcount are expected to increase in the first half of 2017. In total 48% of respondents anticipate an increase in staff headcount, while 37% expect no change and only 15% expect a reduction. Regarding expectations of sales over the next six months, 67% of respondents anticipate an increase. Raw materials prices are expected to rise over the coming six months, with 82% of respondents predicting an increase. Energy prices are also set to increase over the forecast period, with 73% of respondents predicting an upturn.
About this report
The Construction Confidence Report is the result of quarterly surveys of the opinions and expectatios of respondents drawn from Timetric’s panel of construction industry executives.
CIC clients can access the report here
About the Construction Intelligence Center
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Source: Company Press Release