In July 2016, the economic climate has slightly improved in the building construction industryMonthly survey of building - July 2016

According to the business managers surveyed in July 2016, the business climate has improved slightly in the building construction industry. The composite indicator has increased by one point and stands at 96, a level not reached since August 2012. However, it stays below its long-term average (100).

Informations rapides
No 188
Paru le : 21/07/2016
Prochaine parution le : 21/12/2017 at 08:45 - December 2017

According to the business managers surveyed in July 2016, the business climate has improved slightly in the building construction industry. The composite indicator has increased by one point and stands at 96, a level not reached since August 2012. However, it stays below its long-term average (100).

Climate – Business climate composite indicator

TurningPoint – Turning-point indicator

  • Note: close to 1 (respectively −1), it indicates a favourable climate (respectively unfavourable). Between +0.3 and −0.3: uncertainty area

The turning point indicator has gone into the favourable zone.

Business prospects have improved

In July, more business managers than in June forecast an increase in their activity for the next few months. Furthermore, their opinion about the general outlook in the sector has improved clearly compared with April. The corresponding balances have reached their highest level since July 2011 and stay above their long-term average. However, the balance of opinion on past activity has fallen back and moves away from its long-term average.

Activity – Activity tendency in building construction

Tableau1 – Building industry economic outlook

Balances of opinion, in %, SA
Building industry economic outlook
Mean* April 16 May 16 June 16 July 16
Composite indicator 100 95 95 95 96
Past activity –4 –12 –3 –6 –11
Expected activity –7 0 –1 –2 1
Gen. business outlook –19 –13 –6
Past employment –5 –22 –22 –22 –20
Expected employment –5 –19 –14 –16 –15
Opinion on order books –24 –44 –46 –45 –44
Order books (in month) 5,4 6,7 6,6 6,4 6,8
Production capacity utilisation rate 88,5 85,6 85,5 85,8 86,0
Obstacles to production increase (in %) 32 21 21 22 23
- Because of workforce shortage (in %) 14,2 2,8 2,7 3,3 3,6
Recruiting problems (in %) 57 41 45
Expected prices –15 –26 –25 –23 –23
Cash-flow position –10 –12 –9
Repayment period 29 31 31
  • * Mean since September 1993.
  • Source: INSEE, French business survey in the building industry

Slightly less pessimism about employment

In July 2016, virtually as many business managers as in June point out a fall in their staff size in the recent period and for the next three months. Yet, the corresponding balances of opinion still stand well below their long-term average.

Workforce – Workforce size tendency in building construction

Order books still judged lower than normal

Business managers continue to deem their order books very low: the corresponding balance has recovered slightly since May 2016 but stays far below its long-term average. With their staff size, business managers consider that their order books provide 6.8 months of work, a level slightly higher than in June and above its long term average (5.4 months).

OrderBooks – Order books

Production capacity remain underused

Since 2008, the production capacity utilisation rate has been inferior to its long-term average (88.5%) but since 2015, it has gradually increased. In July 2016, it has risen slightly again at 86.0%, around two points above its lowest level in February 2015. Almost one business manager out of five has reported difficulties in increasing output, against one out of three in average since 1993. Only 45% of construction firms have experienced difficulties in recruiting labor force in July 2016, against 57% in average. However, this rate has increased by five points since October 2015 and reaches in July its highest level since April 2014.

Pcur – Production capacity utilisation rate

Balance of opinion on cash-flow position has improved

In July 2016, as many business managers as in June forecast that they are going to reduce their prices during the next three months. The corresponding balance remains substantially below its long-term average. However, more business leaders than in the previous quarter indicate that their cash-flow position has improved. The corresponding balance has become above its long-term average for the first time since April 2011. As many business managers as in the previous quarter report that the repayment periods tend to get longer.