Western Mainland Europe Construction Market Report 1Q 2023
France
Gross domestic product and inflation
France saw an overall positive gross domestic product (GDP) rate in 4Q 2022. The Organisation for Economic Co-operation and Development’s (OECD) forecast sets out further growth in 1Q 2023 at 0.43% and is estimated to steadily approach 1% by the end of the year.
Showing predictability, inflation was reported at 6% in January 2023, remaining similar to the previous three months. The Consumer Price Index began a slow recovery in 4Q 2022 which appears to have continued.
Construction materials
The locally produced Building Trades (BT) Index has also shown a degree of consistency, with the overall ‘All Trades’ figure remaining around 14% since September, even hinting at a small reduction in December when there was a decrease of 0.4%.
Globally, commodity pricing saw an uptick during the last quarter. As pricing is still generally lower than the peaks noted at the start of last year, the BT Index shows several reductions in 4Q 2022 pricing including metal framework, aluminium bay closing and glazing.
Energy costs continue to play a major role in construction pricing as factories are still battling profit margins and high operating expenditure.
Market outlook
The recent EU construction survey reported almost as many managers encountering obstacles limiting their production as in the previous month (68%). General opinion amongst contractors in February 2023 is that activity within the building industry is deteriorating, although supply chain tensions are in decline.
Last month, building contractors considered their order books to be above normal, providing 8.8 months of work — stable compared to the previous month and well above the long-term average.
In February 2023, far fewer businesses announced that they would increase their prices over the next three months, when compared to the beginning of the year, indicating an expectation for pricing stability across some specialties, although not all.
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. Risk analysis studies are recommended to better evaluate and prepare appropriate contingencies for your particular project conditions and risk exposure.
Lutetia Hotel, St Germain des Prés, Paris — Gleeds provided Cost Management services.
