Construction Productivity in Europe: Our 2018 Forecast
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The construction sector is highly important in the EU. It provides 18 million jobs valued at 8.6% of the EU’s total GDP and has 42.9 million workers in Europe depending on. Additionally, it gives international EU partners access to 500 million people totalling to 13 trillion euros in GDP. The European construction sector also provides creative and innovative solutions for current social, climate, and energy challenges.
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Construction Productivity in Europe: Our 2018 Forecast
- 1. Construction Productivity in Europe Our 2018 Forecast
- 2. THE CONSTRUCTION SECTOR IS HIGHLY IMPORTANT IN THE EU 18 million jobs (8.6% of EU’s total GDP) 42.9 million workers Access to 500 million people (13 trillion euros in GDP) Creative and innovative solutions for social, climate, and energy challenges *GDP - the size of a country’s economy. It is one of the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period.
- 3. Production declined in most countries: EU construction growth suddenly dropped in 2008 and onwards -54.4% production rate in Lithuania (2009) Declining growth rates before 2009 in countries like Estonia, Ireland, Spain Almost stable production levels in countries like Germany, Austria Negative growth in the entire EU was apparent until 2013 Constant decline in overall construction (in EU-28) between 2008 to 2013 Index showed more than 30% points loss on average Effects of economic crisis were less visible for civil works EUROPEAN CONSTRUCTION DURING THE 2008 CRISIS
- 4. *EU 28 - the 28 member states of the European Union namely: Austria, Belgium ,Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom. *EA-19 - officially called the Euro Area, 19 member states of the monetary union of the EU that use the euros (€) as their common currency (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain) *Data from Eurostat BUILDINGS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU-28 2.2 4.6 2.8 -3.5 -9.7 -3.7 -1.8 -4.9 -1.7 3.8 0.1 2.0 EA-19 2.5 4.6 1.9 -4.8 -8.7 -5.8 -3.2 -5.1 -2.3 2.3 -1.0 1.4 Building works suddenly dropped to negative production in 2008 in both EU-28 and EA-19 countries, which started to climb up to positive growth in 2013 Civil works slowed their way to negative production by 2006 with slow recovery climbing in 2014. BUILDINGS AND ENGINEERING WORKS FROM 2005 TO 2016 CIVIL INGINEERINGS WORKS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 4.0 -0.1 3.2 -0.7 0.8 -4.8 0.4 -9.0 -2.3 0.6 4.9 -2.2 5.1 -1.0 2.5 -3.4 -1.3 -9.3 -2.3 -8.0 -2.1 0.6 -0.7 2.4
- 5. PRODUCTION STARTED RECOVERING IN 2013 Construction production started increasing about 6% points in 2013 and 2014 Continuous increase in 2016 shows 80% level of pre-crisis construction output peak Production started increasing slowly in countries in the Euro zone (EA-19) Construction demand is rising in all 19 member countries in 2017. This is the first time that growth has been seen across the board in Europe since Germany’s reunification; and it looks like this feat will be repeated in 2018. - Ludwig Dorffmeister, Euroconstruct
- 6. Construction output steadily grew from 2005 until it dropped in 2008, wherein overall construction was in steady decline. Although a brief spike for building construction was seen in 2010, overall growth was declining. From 2013, a slow and steady recovery is seen. However, in order to reach pre-crisis production level, investments and time are needed. TOTAL CONSTRUCTION ACTIVITY FROM 2005 TO 2016 *Data from Eurostat
- 7. CURRENT CONSTRUCTION OUTPUT 22%78% Residential and non-residential projects (about 0.997 billion euros) Civil engineering works (about 0.218 billion euros)
- 8. Year Output, Euro Increase compared to previous year, % 2016 1,278 billion 2.2% 2017 1,304 billion 2.0% 2018 1,343 billion 3% GETTING BACK UP AFTER THE CRISIS
- 9. Forecasted to increase European construction revenues - due to adapting buildings to climate change Energy Efficiency Plan 2011 is set for 3% of all public structures to be renovated per year until 2020 – all new buildings must be carbon-neutral for EU-27 countries European green construction innovations will impact overall global construction sector European construction is now even greener and more sustainable and ready to return to steady growths GREEN BUILDING INITIATIVES
- 10. Residential construction has greatly improved since 2016 Construction output in France, Germany, the UK continues at a sustainable level Output in smaller countries has picked up Non-residential construction continue to recover with 2-3% growth forecast for 2018/2019 Office construction is expected to perform above averages Improvements in the Netherlands, Belgium and Denmark markets are expected Overall outlook is positive for the European construction industry with an expected steady growth in 2018 STEADY RECOVERY
Editor's Notes
- The construction sector is highly important in the EU. It provides 18 million jobs valued at 8.6% of the EU’s total GDP and has 42.9 million workers in Europe depending on. Additionally, it gives international EU partners access to 500 million people totalling to 13 trillion euros in GDP. The European construction sector also provides creative and innovative solutions for current social, climate, and energy challenges.
- During the 2018 crisis, European construction production declined in most countries. Construction growth in the EU suddenly dropped in 2008 and onwards. In some countries like Estonia, Ireland and Spain, growth rates were declining even before 2009 while almost stable production was seen in countries like Germany and Austria. In general, it was just a steady decline in overall EU construction between 2008 to 2013. Negative growth was apparent until 2013 in the entire EU with the index showing more than 30% points loss on average. However, the effects of economic crisis were less visible for civil works.
- Building and engineering data from 2005 to 2016 show that building works in both EU-28 and EA-19 countries suddenly dropped to negative production in 2008, but started to climb up to positive growth in 2013. Civil works slowed their way to negative production by 2006 with slow recovery climbing in 2014. When we say EU 28, we refer to the 28 member states of the European Union and EA-19 refers to the Euro Area which is comprised of the 19 EU member states that use euros as their common currency.
- Construction production started increasing about 6% points in 2013 and 2014 with a continuous increase in 2016 showing 80% level of pre-crisis construction output peak. Ludwig Dorffmeister of Euroconstruct mentioned in an article that, “Construction demand is rising in all 19 member countries in 2017. This is the first time that growth has been seen across the board in Europe since Germany’s reunification; and it looks like this feat will be repeated in 2018.”
- Construction output steadily grew from 2005 until it dropped in 2008, wherein overall construction was in steady decline. Although a brief spike for building construction was seen in 2010, overall growth was declining. From 2013, a slow and steady recovery is seen. However, in order to reach pre-crisis production level, investments and time are needed.
- The current construction output details residential and non-residential projects amounting to 78% of total construction output in the EU-28 (about 0.997 billion euros) while civil engineering works - like railways, roads, bridges, and similar infrastructure projects - amount to 22% (about 0.218 billion euros).
- In 2016, a 2.2% growth was seen in construction activity and productivity in the whole EU sector while more than 2% growth was seen in 2017. A forecast of 3% growth is seen to increase in 2018.
- A contributing factor to EU’s construction recovery is the EU’s green building initiatives. They’re forecasted to increase European construction revenues thanks to adapting buildings to climate change. The Energy Efficiency Plan of 2011 lays out for more construction renovations that try to achieve the goal of 3% public structures to be carbon neutral per year until the year 2020. These initiatives will definitely impact the overall construction sector and makes European construction even greener and more sustainable and ready to return to steady production growths.
- Steady recovery has been constantly observed since 2016 with residential construction greatly improving since 2016 especially in France, Germany and the UK continuing their construction output at a sustainable rate. Even output in smaller countries has picked up. Non-residential construction, on the other hand, also continue to recover with 2-3% growth forecast for 2018 and 2019. Improvements in the Netherlands, Belgium and Denmark markets are expected. The overall outlook is positive for the European construction industry with an expected steady growth this 2018.