Western Mainland Europe Construction Market Report 3Q 2023
France
Local economic indicators
The French National Institute of Statistics and Economic Studies (Insee) reported year-on-year growth of 0.9% in 2Q 2023, as well as 0.5% growth over the previous quarter. Foreign trade (imports and exports) contributed positively while domestic demand, including construction, decreased. The Organisation for Economic Co-operation and Development’s (OECD) recent Economic Outlook, published in June 2023, forecasts a growth rate of 0.8% for the year and 1.3% in 2024.
Insee indicated preliminary annual inflation rose to 4.8% in August 2023, breaking a four-month run of declining rates. The Eurostat Harmonised Index of Consumer Prices (HICP) has seen fluctuation during the last three months, currently at 5.7% in August. The OECD forecasts inflation to continue declining in the second half of the year, reaching 4.9% in 4Q 2023 and trending towards 6% for the year’s average.
Construction materials
Stability persists as the general All Trades (BT01) Index shows minor monthly fluctuations, indicating that price increases in the construction sector are more in line with general inflation — a contrast from the volatility seen in 2022.
Recoveries in global steel prices allow framework and metal frames (BT07) to continue decreasing since peaking last August. The BT01 figure has steadied with a 0.2% decrease from March–June 2023 due to changes in production costs for key items seen below:
Market outlook
The construction confidence indicator has seen four consecutive months of decline, currently at -2.1 in August. While work expectations over the next three months are positive at 8.9, overall order books remain negative at -13.1. Major contributors to limiting building activity include insufficient demand and labour shortages.
As always, Gleeds advises regular project budget updates that take into account recent market pricing and local risk factors which may impact project programmes and costs. Undertaking risk analysis studies enables better evaluation and preparation of appropriate contingencies for your particular project conditions and risk exposure.
La Halle Freyssinet, Paris — Gleeds provided Quantity Surveying/Cost Management services.
