The French construction sector continues to slow down

In June of this year, the business climate in the construction industry in France, according to the estimates of companies in the sector, continued to deteriorate. It is stated in the report of the National Institute of Statistics and Economic Research (Insee).

According to the results of the survey, in June 2023, compared to May, the number of companies calling the market unpredictable increased. Compared to the previous month, fewer construction contractors believed their order books provided them with 8.5 months of work in June.

The number of executives who reported facing obstacles limiting their production was unchanged from May. The share of managers who reported a labor shortage (44% vs. 46% in May), as well as supply difficulties (11% vs. 12% in May), decreased somewhat. However, these two indicators remain well above the long-term average.

In June, there was a slight increase in the proportion of companies reporting that they were at the limit of their production capacity (that is, they could not service more orders with the funds available). 27% of company managers cited a lack of personnel as the reason, 6% cited supply difficulties.

At the same time, according to Kallanish, the French rebar market is stagnating and producers are resorting to production cuts to deal with ongoing overcapacity amid a sluggish private construction sector. Domestic rebar prices have fallen significantly in recent months, currently averaging €580/t ex-works.

As GMK Center reported earlier, EUROFER predicts that in 2023 volumes of construction in the EU will decrease by 1.6% and recover to 1.3% in 2024. In 2022, the volume of production in the construction sector of the EU increased by 4.8%.

Also, the positive dynamics in the European construction sector, which was observed from the fourth quarter of 2020, ended in the last quarter of 2022 due to the increase in prices for building materials, the lack of labor in some EU countries and increased economic uncertainty. According to Eurostat, in March and April 2023, the volume of construction in the EU decreased by 1.6% and 0.4% compared to the previous month, respectively. In the first quarter, construction volumes increased by 0.4% compared to the same period last year.