Western Mainland Europe Construction Market Report 3Q 2023
Spain
Local economic indicators
The Spanish National Institute of Statistics (INE) circulated a flash report on 28 July 2023, reporting that the country experienced 1.8% year-on-year growth in 2Q 2023 and 0.4% growth over the previous quarter. The Organisation for Economic Co-operation and Development’s (OECD) recent Economic Outlook, published in June 2023, forecasts a growth rate of 2.1% for the year and 1.9% in 2024.
Annual inflation data from INE for August is 2.6%, a slight increase from July (2.3%) but still an overall improvement from January’s 5.9%. The Eurostat Harmonised Index of Consumer Prices (HICP) shows similar results, reporting a small rise in August to 2.4% from July’s 2.1%. The OECD forecasts 2023 inflation at 3.9% for the year’s average and remaining at 3.9% in 2024.
Construction materials
The local industrial producer price index, as reported by Eurostat, reveals ongoing price recovery in wood, flat glass and electrical distribution. Clay and concrete have experienced more significant inflation throughout 2023, likely due to energy price volatility. Steel and structural metals remain relatively stable.
Market outlook
In August, construction confidence was negatively reported at -1.6 for the first time since January (10.6), largely due to the current negative order books reported at -9, an indication of the summer lull typical for the country. Labour shortage concern has increased 2.3 points to 9.2, while insufficient demand remains the largest factor (64.3) holding back activity in the sector. Often, delays in signing contracts will result in contractors submitting revised tenders for increased amounts. Additionally, respondents report an expectation for increased pricing over the next three months.
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.
Castellana, 81 refurbishment, Madrid, Spain — Gleeds provided Project Management,
Quantity Surveying and Cost Management services.
