Uncertain Prospects for 2013 in the Construction Market

The construction world and manufacturers of sector machinery are experiencing an up and down 2013: it is by now evident that even analysts are unable to say when this economic crisis – that especially in Europe has returned the market to 1990s levels (Euroconstruct suggests that GDP in the old continent in 2013 will be around 1.27 trillion euros at 2011 prices, equal to 1995 levels) – can really be considered over. The construction boom experienced in the years immediately following the introduction of the Euro is a golden age that must be forgotten for a long time to come. According to the latest CECE forecasts, a recovery in the construction industry in unlikely before 2015. And while equipment manufacturers until last year were able to look at the rest of the world with optimism, in recent months there have been some signs of slowing down and reduced demand is by now evident even in these areas.
Returning to Europe, the problem is that all of building and construction sectors are going through a hard time: CECE again suggests that overall growth in new residential construction will see a downturn of 1.1% over the course of this year. Forecasts are not quite so negative with reference to renovation of existing residential property, which should maintain current levels and may even see an increase between 2014 and 2015. Again with reference to the overall European situation, forecasts for non-residential buildings and the civil engineering sector are also negative, affected in some countries by the slow down and even blocking of public investments for budget reasons and in other countries, particularly in Eastern Europe, by cuts to European Convergence Funds that in recent years had encouraged the implementation of significant public infrastructure such as roads, railways, hydro and electric plant. This is the overall picture, although there are considerable differences between countries in central and northern Europe and those in the south (which, for completeness, include Ireland) that are experiencing a much deeper crisis. Spain, Portugal and Italy are the countries where the construction market is experiencing the most difficulty (and for 2013 ANCE estimates a further downturn in construction investments of 3.8%), to the extent that Italian industry associations, faced by the substantial absence of government action, organised a “Rage Day” in Rome. A protest event which visually highlighted the closure of 40 thousand companies and the loss of 360 thousand jobs since the beginning of the crisis by laying out thousands of yellow helmets on the ground.
The market naturally follows the same dynamics: CECE suggests that overall approximately 105,000 units were sold in Europe in 2012, 3% down compared to the previous year. And this downturn worsened in the last quarter, falling by as much as 11%. In Italy, UNACEA and ASCOMAC data outline the decline in 2012 over 2011 of as much as 31%. Markets in France, Germany and, to a lesser extent, Great Britain are holding steady, and there are positive figures for Scandinavian countries, Turkey and especially Russia which posted +25% in sales.
2013 will be another year of uncertainty and necessarily short-term forecasts subject to frequent verification and adjustment while waiting for the economic recovery in Europe really to take off. Moreover, and not only in Italy, there is a growing awareness that economic austerity policies, while certainly necessary to avoid disastrous defaults, must now be joined by support policies that take into account the vital need for a genuine economic recovery. The alternative is a self-perpetuating recession prompting even further austerity measures in the waking of falling GDP and the consequent growth in GDP-Debt ratio.