Conditions in the world’s construction market have stalled as growing pessimism in China offsets modest improvements in Europe, the latest report has found.

The Royal Institute of Chartered Surveyors (RICS) has released the second quarter edition of its Global Construction Monitor report.

Based on survey responses from more than 2,000 construction firms, the report provides a snapshot of market conditions and forward expectations throughout the world.

All up, the Construction Sentiment Index (CSI) came in at +5 in the June quarter.

This is well down from the +9 and +17 that were recorded in the March and December quarter respectively.

The index is constructed by taking an unweighted average of current and twelve-month expectations for residential building workloads, non-residential building workloads, infrastructure workloads and profit margins.

Its results can range from -100 to +100.

At its current level, the index is in neutral territory. This means that conditions and forward expectations are neither improving nor deteriorating.

Driving the decline was a sharp contraction in sentiment across the APAC region (see chart).

In turn, this is being driven by ongoing weakness in the Chinese real-estate sector, which saw a further slump in non-residential workloads in the second quarter.

This more than offset further improvement across Europe, where infrastructure workloads remain strong and lower interest rates have driven a recovery in building conditions.

Elsewhere, conditions remain buoyant across The Americas and the Middle East and Africa.

In terms of sectors, activity remains strongest in infrastructure, with forward workloads being driven by energy, transport and data centres.

There is also confidence about private residential workloads across much of the world outside China.

Turning to specific countries, conditions are strongest in the UAE, Spain, Saudi Arabia and India.

In the UAE and Saudi Arabia, a boom in construction is being driven by massive government investment programs to transition these economies away from oil dependence.

In Spain, activity is being supported by investment in transport, energy and public utilities.

In India, conditions are being driven by energy, infrastructure and railway projects along with government investment in nuclear energy capacity.

The report comes as the world’s construction market appears to have entered a short-term slowdown.

In its latest forecast issued in July, Oxford Economics said that it expects the overall dollar value of global construction activity to contract by 2.4 percent across calendar 2025 to come in at $US 9.4 trillion.

The slowdown is being driven by tariffs, policy shifts and the continued weakness of Chinese real estate, Oxford said.

Longer term, however, the outlook is more promising.

In its Global Powers of Construction report issued in July, Deloitte said that it expects the world’s construction market output to reach US$16.11 trillion by 2030.

This will occur on account of growing urbanisation, aging population, digital transformation and the energy transition.

At a global level, the RICS report also found that:

  • Whilst financial constraints have eased, these remain the most significant factor which is hindering the construction industry at the moment. This is followed by material costs and skills shortages (see chart). (Note: the survey does not ask respondents specifically about the impact of US tariffs.)
  • The most acute worker shortages are for skilled trades, project managers and quantity surveyors.
  • Consistent with slowing conditions, respondents report a reduction in headcount (-14) over the second quarter. However, they anticipate a return to employment growth over the next twelve months.

The report was informed by survey responses from 2,119 construction firms.

Questionnaires were sent out on 11 June. Responses were received until July 28.

 

 

Enjoying Sourceable articles? Subscribe for Free and receive daily updates of all articles which are published on our site

 

Want to grow your sales, reach more new clients and expand your client base across Australia’s design and construction sector?

Advertise on Sourceable and have your business seen by the thousands of architects, engineers, builders/construction contractors, subcontractors/trade contractors, property developers and building industry suppliers who read our stories across the civil, commercial and residential construction sector