Western Mainland Europe Construction Market Report 4Q 2023
France
Local economic indicators
The French National Institute of Statistics and Economic Studies (Insee) reported year-on-year (YoY) growth of 0.9% in 3Q 2023, as well as 0.1% growth over the previous quarter. Construction contributed 0.0% towards the overall gross value add in the quarter and retracted 0.5 points YoY. The Organisation for Economic Co-operation and Development (OECD) updated its yearly GDP forecast to 0.9% in 2023 and 0.8% in 2024.
Insee indicated preliminary annual inflation decreased to 4.0% in October after August and September recorded 4.9%. The results highlighted energy (-0.5; month-over-month (MoM)) and especially petroleum products (-1.7) as the only negative contributors towards inflation. The Eurostat Harmonised Index of Consumer Prices (HICP) had similar results, with October reporting a recovery at 4.5% after two consecutive months at 5.7%. The OECD updated its forecasted 2023 inflation to 5.7% for the year’s average and 2.7% in 2024.
Construction materials
The local industrial producer price index, reported by Eurostat, reveals YoY price recoveries in wood, flat glass, structural steel and electricity, gas, steam and HVAC supply. See the below table for MoM, YoY and indexed pricing:
The French All Trades (BT01) Index shows that the metal framework (BT07) has experienced the largest YoY recovery at -17.2%, while others display MoM recoveries. See the below table for a summary of building trades cost evolutions MoM, YoY and indexed with respect to 12/2019:
Market outlook
The construction confidence indicator has continued declining, reaching –9.7 in November due to the reported worsening of current overall order books (-20.4). However, work expectations over the next three months are positive at 1.0. Reports indicate insufficient demand (31.4) and elevated labour shortages (41.0) as the largest factors limiting activity.
As always, Gleeds advises regular project budget updates that take into account recent market pricing and local risk factors which may impact 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.
