Market Report 3Q/4Q 2022
France
Gross domestic product
France had positive, although minimal (0.2%) gross domestic product growth in 3Q 2022. The International Monetary Fund forecasts similar growth rates for 2023 at less than 1%.
Inflation was reported at 6.2% in October, rising after steady declines since July, potentially delaying the Organisation for Economic Co-operation and Development’s forecast for recovery to 1Q 2023.
Construction materials
The Building Trades (BT) index has shown several drops from 2Q 2022 to 3Q 2022, which can been seen in the chart on page two of this snapshot report.
In general, the BT cost index shows a peak in August, followed by a decline in September.
Globally, commodity pricing continues to decline. Typically, any savings that may be passed on to construction tenders is delayed and lately, greatly reduced due to elevated energy and fuel costs which make implementing savings impossible.
Market outlook
General opinion is that construction activity is deteriorating in France. Economic incertitude remains, with contractors currently less optimistic than previously about their activity for the coming trimester.
Tension concerning production activity remains although supply difficulties are reducing, likely due to new challenges brought on by the energy crisis.
Company order books remain relatively full. Since 2021, contractors in France have maintained a work outlook that averages nine months, showing a short-term view of stability. New and ongoing pressures have not yet developed into additional stress factors which could negatively impact the industry.
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.
