August constructsteel newsletter

Construction market trends

United States

X Values ABI (LHS) Output (RHS, %, y-o-y)
Jan-19 55.3 -1.54
Feb-19 50.3 -2.64
Mar-19 47.8 1.08
Apr-19 50.5 1.93
May-19 50.2 3.56
Jun-19 49.1 8.14
Jul-19 50.1 10.15
Aug-19 47.2 11.25
Sep-19 49.7 11.98
Oct-19 52 13.42
Nov-19 51.9 17.45
Dec-19 52.1 13.61
Jan-20 52.2 14.07
Feb-20 53.4 11.99
Mar-20 33.3 8.27
Apr-20 29.5 3.30
May-20 32 0.45
Jun-20 40 -0.66
Jul-20 40 -2.89
Aug-20 40 -6.80
Sep-20 47 -7.20
Oct-20 47.5 -7.37
Nov-20 46.3 -9.66
Dec-20 42.3 -8.71
Jan-21 44.9 -6.91
Feb-21 53.3 -7.50
Mar-21 55.6 -3.85
Apr-21 57.9 -1.17
May-21 58.5 -0.88
Jun-21 57.1 -0.57
Jul-21 54.6 0.67
Aug-21 55.6 2.24
Sep-21 56.6 2.81
Oct-21 54.3 3.34
Nov-21 51 7.40
Dec-21 52 7.47
Jan-22 51 7.16
Feb-22 51.3 9.06
Mar-22 58 7.51
Apr-22 56.5 11.1
May-22 53.5 11.5
Jun-22 53.2 10.7
Jul-22 51 12.6
Aug-22 53.3 13.4
Sep-22 51.7 13.5
Oct-22 47.7 12.9
Nov-22 46.6 13.6
Dec-22 48.4 15.5
Jan-23 49.3 20.2
Feb-23 48 20.9
Mar-23 50.4 21.3
Apr-23 48.5 22.2
May-23 51 21.5
Jun-23 50.1 20.9

Single-family housing starts remain robust; incentives to bring manufacturing back to the United States are boosting factory construction.

Private residential output up 0.9% m-o-m in June (-10.4% y-o-y); Building permits down -3.7% m-o-m (-15.3% y-o-y) but single family permits up 2.4% m-o-m and to the highest levels since June 2022.

Private non-residential output was flat m-o-m in June (21% y-o-y). Spending on private non-residential structures, e.g., factories, was unchanged as a rise in manufacturing and commercial was offset by falls in outlays on power plants and healthcare; Architecture Billings Index (ABI) down to 50.1 from 51 in May (>50, expansion).

China

X Values Floor space started
Jan-19 17.91
Feb-19 13.08
Mar-19 10.69
Apr-19 13.08
May-19 11.15
Jun-19 9.12
Jul-19 6.61
Aug-19 6.95
Sep-19 6.05
Oct-19 11.01
Nov-19 8.02
Dec-19 8.26
Jan-20 -6.58
Feb-20 -17.65
Mar-20 -30.64
Apr-20 -18.42
May-20 -8.57
Jun-20 3.82
Jul-20 7.59
Aug-20 7.7
Sep-20 3.91
Oct-20 1.28
Nov-20 1.84
Dec-20 4.71
Jan-21 11.8
Feb-21 24.9
Mar-21 8.3
Apr-21 -5
May-21 -10.9
Jun-21 -6.1
Jul-21 -10
Aug-21 -13.1
Sep-21 -17.4
Oct-21 -21.2
Nov-21 -22.6
Dec-21 -28.6
Jan-22 -24.1
Feb-22 -23.1
Mar-22 -17.5
Apr-22 -28.9
May-22 -36
Jun-22 -43.8
Jul-22 -44.1
Aug-22 -45.3
Sep-22 -45.1
Oct-22 -42.1
Nov-22 -43.9
Dec-22 -43.8
Jan-23 -40.4
Feb-23 -27.45
Mar-23 -19.16
Apr-23 -24.24
May-23 -28.65
Jun-23 -29.59

China’s real estate activity declining and prompting officials to support the sector with incentives; infrastructure spending supports overall construction.

The 3-month moving average y-o-y decline in floor space started reached -30% in June; floor space sold was down -22% y-o-y. Railway, road transport, and civil aviation grew by 21%, 3%, and 10%, respectively, y-o-y on a year-to-date basis.

Europe

X Values PMI (LHS) Output (RHS, %, y-o-y)
Jan-19 50.6 0.65
Feb-19 52.6 5.64
Mar-19 52.2 5.78
Apr-19 52.1 2.82
May-19 50.6 1.87
Jun-19 50.8 1.86
Jul-19 50.6 1.58
Aug-19 49.1 1.95
Sep-19 50.5 0.73
Oct-19 50.7 1.02
Nov-19 50.6 1.48
Dec-19 51.3 -1.44
Jan-20 51.9 4.94
Feb-20 52.5 0
Mar-20 33.5 -15.50
Apr-20 15.1 -29.50
May-20 39.5 -10.16
Jun-20 48.3 -4.56
Jul-20 48.9 -2.75
Aug-20 47.8 0
Sep-20 47.5 -2.28
Oct-20 44.9 -1.37
Nov-20 45.6 -0.91
Dec-20 45.5 -1.19
Jan-21 44.1 -3.2
Feb-21 45 -3.98
Mar-21 50.1 18.84
Apr-21 50.1 42.75
May-21 50.3 12.64
Jun-21 50.3 5.16
Jul-21 49.8 3.58
Aug-21 49.5 -1.00
Sep-21 50 3.17
Oct-21 51.2 3.62
Nov-21 53.3 2.76
Dec-21 52.9 -0.27
Jan-22 56.6 3.95
Feb-22 56.3 7.63
Mar-22 52.8 3.79
Apr-22 50.4 2.81
May-22 49.2 2.53
Jun-22 47 2.09
Jul-22 47 1.45
Aug-22 45.7 2.30
Sep-22 44.2 0.72
Oct-22 45.3 0.72
Nov-22 43.6 1.16
Dec-22 42.6 -0.18
Jan-23 46.1 0.53
Feb-23 47.6 1.58
Mar-23 45 -0.78
Apr-23 45.2 0.26
May-23 44.6
Jun-23 44.2
Jul-23 43.5

Eurozone construction is generally weak; activity is stagnant, and confidence is declining.

Eurozone construction up 0.2% m-o-m in May (0.3% y-o-y); Buildings up 0.3% m-o-m (-0.1% y-o-y); Civil works up 0.1% m-o-m (3.3% y-o-y)
The IHS Markit Eurozone Construction PMI declined to 43.5 in July from 44.2 in June (< 50, contraction).

India

X Values Avg industrial production (y-o-y)
Jan-19 1.44
Feb-19 1.79
Mar-19 4.98
Apr-19 4.30
May-19 2.91
Jun-19 0.18
Jul-19 2.00
Aug-19 -0.71
Sep-19 -5.72
Oct-19 -5.41
Nov-19 0.25
Dec-19 2.15
Jan-20 1.36
Feb-20 5.10
Mar-20 -8.96
Apr-20 -44.41
May-20 -21.15
Jun-20 -12.09
Jul-20 -7.95
Aug-20 -7.48
Sep-20 -0.34
Oct-20 -1.79
Nov-20 -1.71
Dec-20 -0.29
Jan-21 0.67
Feb-21 -3.65
Mar-21 12.60
Apr-21 62.60
May-21 16.40
Jun-21 9.40
Jul-21 9.90
Aug-21 12.20
Sep-21 5.40
Oct-21 8.70
Nov-21 3.20
Dec-21 4.10
Jan-22 4.00
Feb-22 5.90
Mar-22 4.80
Apr-22 9.50
May-22 19.3
Jun-22 13.1
Jul-22 4.8
Aug-22 4.2
Sep-22 8.3
Oct-22 0.7
Nov-22 5.7
Dec-22 8.3
Jan-23 9.7
Feb-23 7.4
Mar-23 3.6
Apr-23 4.3
May-23 4.3
Apr-23 5.0
May-23 8.2

The core index of infrastructure industries expanded to a five-month high in June.

The weighted average index of eight core industries’ output rose by 8.2% y-o-y in June; production of steel was up 22%; cement was up 9.4% y-o-y.

 

Special topic

Is it time to rethink the way we build?

Amidst material scarcities, rising labor costs, and a changing climate, Australia’s construction industry is turning to light gauge framing with TRUECORE® steel, aiming to tackle these challenges through sustainable and efficient solutions. BlueScope’s newly released Environmental Product Declarations (EPDs), including TRUECORE® steel, offer transparency on environmental impacts, empowering the construction sector to make informed choices aligned with demands for sustainability and resilience.

Full article

Technical trends

Empty spaces and hybrid places: The pandemic’s lasting impact on real estate - Report

The lasting effects of the COVID-19 pandemic are undeniable. With a rise in hybrid working and a decline in demand for office space, retail space, and other urban areas, the pandemic has altered the way people live, and work. For example, New York City’s urban core lost 5 percent of its population from mid-2020 to mid-2022.

McKinsey’s report highlights opportunities to repurpose these empty spaces into “hybrid places” that can accommodate a variety of uses. These hybrid places can be used for a mix of office, retail, and residential uses, or they could be converted into community spaces or other amenities. The report also covers how at the built level, construction can be flexible and adaptable by creating modular spaces.

Full article

Construction news headlines

construction market and regulations

North America:

Spending on buildings remains healthy. However, that momentum won’t stick around, and it is expected to slump for the rest of the year. Commercial construction spending, including retail, data center, traditional office, hotels, and retail projects, to grow 11.2% by the end of the year. At the same time, institutional spending should jump by 10% in 2023. But widely reported construction industry snags, such as inflation, rising material prices, increased financing costs, and labor shortages, are beginning to poke holes in the trajectory of nonresidential building spending.

Spending likely to slump in rest of year

North America:

The Dodge Momentum Index, a benchmark that measures nonresidential building planning, dipped 2.5% in June due to a deceleration in institutional construction planning. While the commercial sector rose 3.1% on the back of data center and hotel projects, the institutional segment plunged 10.5% in June as education and healthcare activity stalled. Compared to last year, however, the commercial and institutional segments were 17% and 39% higher, respectively, though how long that momentum will continue is still unclear.

Construction planning falls for fourth straight month

North America:

Construction backlog remained flat in June at 8.9 months, the third consecutive month outstanding projects that contractors have booked, but haven’t yet started, notched that level. The number was also exactly the same as results from a year ago. Infrastructure backlog increased for the third straight month and, more than 18 months after the passage of the USD 1.2Tn Infrastructure Investment and Jobs Act, is at its highest level in two years.

Construction backlog holds steady on infrastructure tailwinds

Europe:

The rise in mortgage interest rates and cost of living crisis is plunging the UK construction industry into recession, according to building products manufacturers. The construction industry is expected to experience an acute recession this year driven by double-digit falls in private housing new build and private housing repair, maintenance, and improvement, the two largest sectors of the construction industry in the UK.

Recession latest: Industry forecasts get bleaker and bleaker

Asia:

South Korea’s construction deals fell by a record margin last quarter as the property market cooled with rising interest rates weakening demand, and inflation fueling costs. The value of contracts nationwide slid 18.4% from a year earlier to WON 66.7Tn (USD 51Bn) with most of the falls in the private sector. The lack of construction activity adds to factors weighing on the outlook for the economy. Gross domestic product contracted last quarter as construction investment and exports slumped while inflation increased expenses for both companies and consumers.

South Korean Construction Deals Fall by Record Amid Slowdown

Africa:

The United Kingdom’s credit agency, UK Export Finance, has underwritten GBP 373Mn (USD 483Mn) of financing for upgrades to Zanzibar’s Road network and to Pemba Airport. The infrastructure upgrades are set to boost Zanzibar’s Island economy, which draws around a quarter of its annual GDP from tourism. Improvements at Pemba Airport will transform the domestic facility into a hub for international flights, which currently can only land on Unguja. The works are expected to involve extending the runway, adding new terminal buildings, and introducing other new infrastructure, including a control tower.

UK underwrites £373 million of financing for Zanzibar road upgrades

Building materials and construction technologies

North America:

Boston-based contractor Suffolk closed the inaugural fund of its venture capital arm, Suffolk Technologies, with USD 110Mn in commitments. The fund has been active since 2019. Suffolk’s strategy is to provide funding in the range of USD 500,000 to USD 5Mn at the seed and Series A level. It will invest in both construction technology and property technology startups in those brackets, according to the release.

AECOM signs deal to help rebuild Ukraine’s infrastructure

North America:

Construction input prices remained unchanged in June compared to the previous month, indicating to an inflation slowdown in the mark. Overall construction input prices are 4.9% lower than a year ago, while nonresidential construction input prices are 4.5% lower. Prices decreased in all three energy subcategories in June. Crude petroleum prices were down 5.9%, while natural gas prices fell 5.3%. Unprocessed energy materials prices decreased 5.0% for the month.

Skanska reports record backlog, Q2 profit drop

Europe:

A sharp reduction in manufacturing input prices has paved the way for an easing of construction product inflation over the next few months. Manufacturing input prices, which are seen as an indicator of the cost of construction materials, fell by 2.7% in the year to June, down from a rise of 0.4% in the year to May. Meanwhile, output prices rose by 0.1% in the year to June, down from a rise of 2.7% in the year to May.

Sharp drop in manufacturing prices paves way for easing of material inflation, experts say

Europe:

Buildots, an automated progress tracking utilizing AI technology, unveiled a new suite of tools called Plan Tracker. The suite is said to empower managers to accurately plan and track weekly activities and milestones by leveraging project-specific data. By monitoring plan progress and measuring effectiveness, Buildots aims to foster continuous improvement in performance and adapt to changing circumstances on-site, ultimately minimizing construction delays.

Buildots introduces new AI-powered tools to combat construction delays

Europe:

Cemex introduced a dedicated plug-in for the BIM REVIT software, widely used in construction project design and management. The new tool by Cemex allows architects and engineers to easily identify the most suitable and innovative Cemex products and solutions for their projects, with a focus on sustainability.

Cemex introduces plug-in for BIM software

Asia:

India’s cement industry is expected to have a volumetric growth of 7-8% in FY24, helped by a rise in demand from the housing and infrastructure sector, giving a ‘stable’ outlook for the sector. Besides, the softening of input costs would help the cement industry to improve its operating profits before interest, tax, depreciation, and amortisation by 14-18% Year-on-Year.

Cement industry production to grow 7-8 pc; gives 'stable' outlook: ICRA Read more at: https://economictimes.indiatimes.com/industry/indl-goods/svs/cement/cement-industry-production-to-grow-7-8-pc-gives-stable-outlook-icra/articleshow/101456905.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Africa:

14Trees, a Holcim joint venture with British International Investment, the UK’s development finance institution, launched Iroko, the first commercial construction 3D printer made in Africa. Drawing on 14Trees’ experience in the construction 3D printing industry, the proprietary technology delivers greater reliability and mobility at lower cost, accelerating access to smart construction. Delivery to first customers in Africa is scheduled for Q4 2023, with plans to expand in Europe in Q1 2024.

Link

construction sector players

North America:

AECOM signed a deal to help rebuild Ukraine’s infrastructure. AECOM will provide program management advisory and technical advisory support to help Ukraine rebuild its infrastructure. The firm signed a memorandum of understanding with Ukraine’s Ministry for Communities, Territories, and Infrastructure Development to serve as its reconstruction delivery partner.

AECOM signs deal to help rebuild Ukraine’s infrastructure

Europe:

Skanska reported SEK 1.3Bn (USD 128Mn) in operating profit for Q2 2023, a 44% decrease from the same period a year ago, largely due to sluggishness in the residential and commercial property development sectors. Despite the profit drop, the company reported a record high order backlog. With SEK 250.3Bn (USD 23Bn) in order backlog and SEK 63.2Bn (USD 6Bn) in new order bookings for the quarter.

Skanska reports record backlog, Q2 profit drop

Europe:

Hochtief sales increased by 9% during the first six months of the year to EUR 13Bn (USD 14Bn) and nominal net profit of EUR 262Mn (USD 291Mn) was also 9% higher year on year. Hochtief’s operational net profit for the period rose by 8% to EUR 270Mn (USD 300Mn). During the second quarter, cash flow from operating activities pre-factoring showed a strong performance, increasing by over EUR 100Mn (USD 111Mn) year on year.

Link

Europe:

Cobod, a global 3D construction printing technology provider, experienced a substantial 40% sales growth, reported in 2022. Despite the global upheaval caused by the Ukrainian war and subsequent economic turbulence, Cobod’s sales elevated from EUR 11Mn (USD 12Mn) to nearly EUR 16Mn (USD 18Mn). Throughout 2022, Cobod maintained its leadership position in 3D construction printer sales. Moreover, company expanded its global footprint and strengthened its partnerships by welcoming industry giants such as General Electric, Holcim, PERI and Cemex into its circle of shareholders, also formed joint ventures.

Cobod sees 3D printing technology sales grow by 40%

Australia:

Australia-based developer and contractor Lendlease laid off about 10% of its global workforce. The layoffs affect 740 workers total, or about 5% of Australian staff and 15% elsewhere across the world, with estimates they will save the business AUD 80Mn (USD 54.4Mn). The decision to cut workers was a part of the company’s permanent shift to being an investment-led company with a leaner operating structure where resources are shared and not replicated in market.

Lendlease cuts 10% of staff worldwide

Asia:

Indian cement manufacturer Dalmia Bharat reported a nearly 34% fall in first-quarter profit as lack of growth in cement prices and rise in raw material prices outweighed volume growth. The company’s consolidated net profit fell to INR 1.30Bn (USD 15.86Mn) for the quarter ended June 30, from INR 1.96Bn (USD 23.7Mn) a year earlier. The company mentioned it saw a rise in expenses due to the higher cost of raw materials consumed.

India's Dalmia Bharat posts 34% fall in Q1 profit on pricing concerns

Upcoming events:

constructsteel Annual Conference 2023

26 September – Seoul, South Korea
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