Current market conditions and near-term forward expectations for the world’s construction markets have eased back, a survey of more than 2,000 construction firms indicates.

The Royal Institute of Chartered Surveyors has released the September quarter edition of its Global Construction Monitor report.

According to the report, overall construction market conditions and sentiment dropped back in the September quarter.

In particular, the Global Construction Sentiment Index contracted from a reading of +15 in each of the March and June quarters to +8 in the September quarter.

The index is constructed by taking an unweighted average of current and 12-month expectations of four series: residential workloads, non-residential workloads, infrastructure workloads and profit margins.

Whilst the result still represents positive conditions overall, the outcome represents the lowest reading since the latter stages of 2022.

The decline was driven by softening sentiment in the residential sector across The America’s and the APAC region.

However, infrastructure conditions remain strong.

In terms of regions, sentiment increased in the Middle East but fell across Americas, Asia Pacific and Europe.

More specifically:

  • Confidence in the Middle East is being driven by a massive construction program in Saudi Arabia as that country attempts to diversify its economy beyond oil production as well as rising workloads in the UAE as construction project flow continues to improve in that market.
  • Across the Asia Pacific, overall conditions continue to be weighed down by China as recent government stimulus announcements are yet to translate into greater market confidence. This has offset encouraging metrics in places such as India and the Philippines.
  • In Europe, conditions remained mildly positive overall as strong conditions in Spain were offset by continued weak conditions (particularly in residential building) in Germany. Overall, European construction markets are expected to improve in 2025 as improving property market conditions along with encouraging building approval data leads through to a recovery in workloads in the currently subdued residential sector.
  • In the Americas, sentiment in both the USA and Canada dipped slightly but remained positive amid healthy workload expectations (note: the survey was taken before the US election).

In addition, the survey revealed trends in two areas.

In terms of industry constraints, the focus is shifting away from financial matters and toward concerns about demand conditions.

Granted, financial constraints remain the most commonly cited factor serving as a barrier to greater expansion in construction activity overall.

However, the portion of respondents citing this as a significant factor has decreased from 71 percent in the June quarter to 63 percent in the September quarter.

This may indicate that the impact of financial constraints is beginning to ease as the cycle of monetary policy tightening appears to have ended.

Also easing is the prevalence of material cost concerns.

Only 53 percent cited this as a significant factor affecting activity in the September quarter – the lowest reading since 2020.

In place of these, concern about insufficient demand is now cited by 54 percent of respondents as a significant restriction on construction activity – the highest share since 2021.

Beyond that, the survey also found that companies are increasingly targeting international markets to plug skilled worker shortages. This is the case even as the skilled worker shortage appears to have peaked.

Across the MEA, Europe, North America and APAC, as many as 67 percent, 66 percent, 60 percent and 50 percent of respondents indicated that they have seen an increase in international hires from outside their local markets.

 

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