Decline in orders continues
In the first quarter of 2023, new orders in the main construction sector had already fallen by around 8 percent compared to the same period of the previous year. In the second quarter of 2023, new orders fell again by the same amount. Almost all sectors and regions are affected. The reasons for this are the increased interest rates, the rise in the price of building materials and the general economic slowdown. The Construction Index, which the Swiss Association of Master Builders (SBC) published for the last time in cooperation with Credit Suisse and will continue to do alone in the future, points to a decline in construction activity in the medium term. Currently, both indicators are still at a high level.
In the first half of 2023, the main construction industry generated 11 billion Swiss francs in turnover, which is practically stagnant compared to the same semester last year. Building construction and civil engineering developed similarly. Accordingly, capacity utilisation is still high and the employment situation is good.
Lower construction activity in the medium term
In the medium term, however, the outlook is becoming gloomier. In the first half of the current year, orders in building construction were CHF 0.6 billion lower than in the same period last year, in civil engineering CHF 0.5 billion lower. Overall, this corresponds to a decline of 8.3 percent. Several companies even reported a negative order intake overall. This means that already planned construction projects were temporarily paused, redimensioned or completely put on hold.
Accordingly, the work in progress has also decreased in the past quarters, standing at 15.9 billion Swiss francs at the end of June 2023, 2.6 percent lower than a year ago.
From housing surplus to housing shortage
The stock of housing orders has also declined. The trend is clear, too few flats will be built this year and next. In the last 12 months, the franc volume of approved housing applications has fallen by 9 per cent compared to the previous 12 months. The housing shortage could be solved more quickly with less regulation. In addition, appeals are often used to push through particular interests at the expense of the creation of new housing. SBC will lobby accordingly at the Federal Council’s next round table on the housing shortage so that construction activity can be accelerated again.
SBC thanks Credit Suisse for very good cooperation – Construction Index to be continued
The Construction Index predicts a 2% increase in turnover for the next quarter compared to the same period last year. This edition marks the end of SBC’s 14-year partnership with Credit Suisse on the Construction Index. SBC would like to thank Credit Suisse for the always very good cooperation, it has been greatly appreciated. SBC will continue the established forecasting tool, from the 4th quarter of 2023 in an adapted form and with a new look.