In July 2017, the economic climate continues to improve in the building construction industryMonthly survey of building - July 2017

According to the business managers in the building construction industry surveyed in July 2017, the business climate has improved again. The composite indicator has risen by one point and has reached 105, its highest level since September 2008. It has improved regularly since early 2015 and now stands well above its long-term average (100).

Informations rapides
No 190
Paru le : 25/07/2017
Prochaine parution le : 21/12/2017 at 08:45 - December 2017

According to the business managers in the building construction industry surveyed in July 2017, the business climate has improved again. The composite indicator has risen by one point and has reached 105, its highest level since September 2008. It has improved regularly since early 2015 and now stands well above its long-term average (100).

Graph1 – Business climate composite indicator

The turning point indicator remains in the favourable outlook 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

General business outlook has improved again markedly

In July 2017, fewer business managers than in June have indicated an increase in their activity over the last three months. The corresponding balance has fallen back while remaining well above its long-term average. In contrast, the balance of opinion on expected activity has increased steeply. It has reached its highest level since March 2008, well above its long-term average. Likewise, business managers' opinion about the general outlook has improved sharply. The corresponding balance of opinion stands well above its long-term average.

Graph3 – Activity tendency in building construction

Table1 – Building industry economic outlook

Balances of opinion, in %, SA
Building industry economic outlook
Mean* April 17 May 17 June 17 July 17
Composite indicator 100 100 103 104 105
Past activity –4 –8 5 10 5
Expected activity –6 9 1 3 11
Gen. business outlook –18 4 13
Past employment –6 –15 –6 –5 –2
Expected employment –5 –5 –1 3 6
Opinion on order books –24 –30 –28 –24 –21
Order books (in month) 5.5 6.8 7.1 7.2 7.3
Production capacity utilisation rate 88.4 87.7 87.8 87.9 88.2
Obstacles to production increase (in %) 32 29 29 29 31
- Because of workforce shortage (in %) 13.8 6.6 7.3 7.1 9.0
Recruiting problems (in %) 57 53 55
Expected prices –15 –13 –16 –13 –6
Cash-flow position –10 –13 –9
Repayment period 29 34 20
  • * Mean since April 1975 for the composite indicator and since
  • September 1993 for the balances of opinion.
  • Source: INSEE, French business survey in the building industry

More business managers have indicated an increase in their past and expected staff size

In July 2017, more business managers than in June have indicated an increase in their staff size over the last three months. The corresponding balance stands well above its long-term average. The balance of opinion on expected employment, already significantly higher than its long-term average, has continued to increase.

Graph4 – Workforce size tendency in building construction

Order books continue to fill up

In July 2017, more business managers than in June consider that their order books are well filled for the period. The corresponding balance of opinion has continued on the upward trend started two years ago and has exceeded its long-term average for the first time since October 2008. With their present staff size, business managers consider that their order books provide 7.3 months of work, a level slightly higher than last month and significantly above its long-term average (5.5 months).

Graph5 – Order books

Production capacity utilisation close to normal

The production capacity utilisation rate has risen regularly since March 2017. In July 2017, it has increased slightly further to 88.2% and has approached its long-term average (88.4%). The part of business managers indicating production bottlenecks is 31%, a level close to its long-term average (32%). Moreover, 55% of business managers have encountered recruiting problems, a larger share than in April 2017, but still less than on long-term average (57%).

Graph6 – Production capacity utilisation rate

More business managers have announced an increase in the cash-flow position

In July 2017, more business managers than in April have indicated an increase in their cash-flow position. The corresponding balance has slightly exceeded its long-term average. At the same time, far fewer business managers have reported an increase in their customers' repayment period.

In addition, many more business managers than in June have announced that they will increase their prices during the next three months. The corresponding balance stands well above its long-term average, at its highest level since September 2008.