The output of the European Union's construction industry is foreseen to drop by 3.5 percent this year, while the downtrend in EU construction sector output is expected to end in 2014 with a rise of one percent predicted for the year, according to the Economic and Steel Market Outlook 2013-2014/Q4 2013 Report from the Economic Committee of the European Steel Association (EUROFER).
According to EUROFER, in the second quarter of this year activity in the EU construction sector recovered only partially from the sharp drop in the first quarter. In the second quarter, output fell by 3.7 percent year on year due to the continuation of weak demand and weather delays caused by heavy rainfall and flooding in several EU countries. In particular, Central Europe suffered its worst flooding in 70 years.
Germany was the only large construction market in the EU which posted a year-on-year rise in activity in the second quarter, whereas the UK remained close to the level of one year earlier. In contrast, output in Poland, the Czech Republic and Spain fell sharply compared with the same quarter of 2012.
The latest monthly survey of confidence in EU industry signals the continuation of depressed sentiment levels in the construction sector, despite some month-on-month improvement. Business conditions will remain difficult due to the persisting lack of large new projects in the building and civil engineering sector. Construction activity in the third quarter of this year is expected to see the usual seasonal slowdown during the summer. This implies that output will continue its downward trend, albeit at less negative growth rates as registered in the first half of the current year. Activity in the last quarter will remain subdued as well. On balance, construction output is forecast to fall by just over three percent this year.
The outlook for 2014 indicates that the construction downturn will come to an end; most EU countries foresee a low-level stabilization or return to growth during the year, while, in general, the first half will be weaker than the second half. EU construction investment is expected to increase cautiously, but access to finance will remain a critical issue. Construction output may rise by around one percent in 2014.
