Construction business outlook worsens in October, other indicators mixed

LONDON (ICIS)–There was negative sentiment regarding business conditions in the European construction market in October while other indicators were more mixed, according to ICIS Chemicals Markets Confidence Index (CMCI) data on Wednesday.

Both short and long-term sentiment on business conditions fell, with future expectations seeing the most significant shift downwards.

This may be in response to increased uncertainty regarding the future, with a Cefic study showing that the global economy suffered a setback in the third quarter.

Uncertainty surrounding Brexit and the allocation of EU infrastructure funds has also affected construction demand in central and eastern Europe, according to sources.

However, overall sentiment for the European economy has been mixed-to-positive in October, with encouraging statistics from the German Ifo economic research group showing renewed confidence in the construction sector.

Order book volumes climbed versus 12 months ago with future expectations more or less stable.

Profitability sentiment continued its downward trend and was now solidly in negative territory after briefly turning positive in August, although expectations for the next 12 months climbed significantly and came close to becoming positive overall.

Despite mixed results the October construction CMCI is notably more positive than in September, which saw a steep drop in all indexes.

Analysis of responses show that buyers are more positive in both long and short-term sentiment than traders and producers, suggesting that the construction industry is currently more of a buyers’ market in Europe.

Buyer’s responses were neutral or positive for five out of six indicators and negative for one, whilst producers and traders’ responses were negative or neutral for all six indicators.

The newly established ICIS Europe CMCI aggregates sentiment from hundreds of petrochemical market players actively involved in price negotiations across more than 60 different markets.

The Europe CMCI runs from +100, to -100, with zero on each index representing neutral, or uncertain conditions, a negative score indicating bearish expectations and a positive score representing bullish expectations. The indices also gather sentiment on the comparison between the current situation and the situation across the past 12 months to give a complete picture of current market conditions and confidence. The information is gathered in the third week of each month.  A full methodology is available on request.

For more details on the overall Europe CMCI data, click here