As mid-year data emerges, the construction sector seeks certainty and opportunity: our own rays of light.

The International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) have both recently released reports, A Rocky Recovery in April and A Fragile Recovery in March, respectively. Germany published their preliminary gross domestic product (GDP) growth data in late May and news outlets were loud in declaring a recession for the country.

With headlines like these, it’s easy to get dragged down by the warnings and instead, miss the opportunities. Germany’s official GDP press release — the same one that reported two consecutive negative growth quarters — also described construction GDP as “rebounding” at 6.1%.

Previously unpredictable material pricing has recently become stable, as is the case with structural steel across all five of our Gleeds Europe countries, and in some locations is showing signs of small inflation reversal. The energy crisis is no longer a hot topic and the next construction cost driver is easy to pinpoint: EU Recovery and Resilience funded projects, heavily targeting energy efficiency and 5G connectivity. We also know carbon credits are starting to impact concrete pricing. It feels like the industry has enough awareness of what’s ahead to step forward with confidence.

Construction could certainly benefit from some predictability, as project inflation and material lead times are more easily customised to unique project particulars.

France, Germany, Portugal and Spain have all met IMF inflation forecasts as of the start of June. Reduced yearly inflation, combined with stable construction material pricing, makes for easier planning of construction costs; a welcomed change from the previous two years where every month meant revisiting business plans and cashflow forecasts.

The European Business Construction Survey, updated monthly, provides contractor insight. All five countries in this report show positive work expectations over the next three months. Germany reports neutral price increase expectations while France, Italy, Spain and Portugal all anticipate some price increases. Although Italy and Spain have a generally positive construction confidence indicator, the remaining countries are practically neutral, nearing zero.

Shadows remain on local economies but the rays of light in construction leading into the second half of 2023 may be enough to guide our decisions with certainty and confidence.