In November 2016, the economic climate improves clearly in the building construction industryMonthly survey of building - November 2016

According to the business managers in the building construction industry surveyed in November 2016, the business climate has clearly improved. The composite indicator has increased by 3 points and has reached 99, its highest level since June 2012. It stands just below its long term average (100).

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Informations rapides – No 302
Paru le : 11/24/2016
Prochaine parution le : 03/23/2017 at 08:45 - March 2017

According to the business managers in the building construction industry surveyed in November 2016, the business climate has clearly improved. The composite indicator has increased by 3 points and has reached 99, its highest level since June 2012. It stands just below its long term average (100).

Graph1 – Business climate composite indicator

The turning point indicator remains in the uncertainty zone.

Graph2 – Turning-point indicator

  • Note: close to 1 (respectively –1), it indicates a favourable climate (respectively unfavourable). Between +0,3 and –0,3: uncertainty area

Business managers' opinion about their activity improves

In November 2016, many more business managers than in October indicate an increase in their activity. The balances on past activity and expected activity have risen and stand significantly above their long-term average.

Graph3 – Activity tendency in building construction

Table1 – Building industry economic outlook

Balances of opinion, in %, SA
Building industry economic outlook
Mean* Aug. 16 Sept. 16 Oct. 16 Nov. 16
Composite indicator 100 95 96 96 99
Past activity –4 –11 –14 –3 4
Expected activity –7 –6 1 –1 5
Gen. business outlook –19 –5
Past employment –6 –22 –20 –21 –18
Expected employment –5 –14 –9 –9 –13
Opinion on order books –24 –41 –38 –40 –33
Order books (in month) 5,4 6,9 6,9 6,9 6,8
Production capacity utilization rate 88,5 87,2 86,6 86,7 87,2
Obstacles to production increase (in %) 32 25 22 24 26
- Because of workforce shortage (in %) 14,0 4,3 3,4 3,9 4,8
Recruiting problems (in %) 57 47
Expected prices –15 –21 –19 –20 –20
Cash-flow position –10 –13
Repayment period 30 36
  • * Mean since September 1993.
  • Source: INSEE, French business survey in the building industry

More business managers plan to reduce their workforce

In November 2016, more business managers than in October have planned to decrease their staff size over the next three months. The corresponding balance of opinion has fallen back and has moved further from its long-term average. The balance of opinion on past staff size has risen moderately, but remains below its long-term average.

Graph4 – Workforce size tendency in building construction

The order books extend slightly

Business managers consider that their order books have extended but remain poorly filled. The corresponding balance has recovered in November and has reached its highest level since August 2012. However, it remains 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 only slightly lower than last month and above its long term average (5.4 months).

Graph5 – Order books

Production capacity is slightly more used

The production capacity utilisation rate has risen by 0.5 points in November and has returned to its level of August (87.2%). It has recovered gradually since early 2015 but remains lower than its long-term average (88.5%). Otherwise, one business manager out of four has reported difficulties in increasing output, compared to one out of three in average since 1993.

Graph6 – Production capacity utilisation rate

Prices are still expected to fall

In November 2016, as many business managers as in October have announced that they are going to reduce their prices during the next three months. The corresponding balance stands below its long-term average.