Construction activity rebounded across Europe in July 2019. This is great news that we have all been waiting for. There is no doubt that construction has been one of the sectors most affected by the Covid-19 crisis, its rebound could well be spectacular but be careful not to fall into euphoria.
Convincing UK restart
In the UK, according to the latest CIPS / IHS Markit update, the gradual resumption of on-site work has helped to increase production volumes and boost business confidence. At the same time, new orders stabilized after three months of sharp declines and purchasing activity grew at the fastest pace since December 2015. The IHS Markit / CIPS UK Global Construction Activity Index, seasonally adjusted, rose to 55.3 in June, from 28.9 in May. Any number above 50 indicates an expansion of activity indicates the site building.co.uk.
However, the Financial Times tempers this news by indicating that falling office and retail occupancy rates threaten to weigh on growth, despite an increase in public investment spending.
Germany is gradually recovering
Germany is also gradually recovering according to the Frankfurter Allgemeine Zeitung. The construction sector is one of the 3 pillars of the German recovery. However, the decline in public markets suggests a still difficult near future and hopes are placed in the European recovery plan.
The building materials sector is on the rise in France
In France, Les Echos headlines “The building materials sector is going up the hill”. Cement manufacturers have rebounded with the reopening of construction sites, to the point that in June, cement sales of world leader LafargeHolcim exceeded those of June 2019. They expect solid demand in the second half of the year.
In l’Usine Nouvelle, Pierre-André de Chalendar, CEO of Saint-Gobain is already seeing the beginnings of a vigorous recovery in the construction sector, driven by green stimulus plans in France and Europe. “The group recorded a 3.7% increase in sales in June 2020 compared to June 2019, announced its CEO of Chalendar during a conference call during the presentation of the second quarter results. The third trimester will be good…
The economic recovery has already started in Spain
In Spain, El Economista presents the stimulus plan of Prime Minister Pedro Sanchez who assured that "the economic recovery has already started": the program aims to quadruple the number of apartments renovated each year in Spain, so that it amounts to around 120,000 per year, compared to the current 30,000, and to facilitate the creation of 221,000 jobs.
110% ecobonus for Italy
Italy has adopted a 110% ecobonus. This is a tax deduction of 110% of expenses incurred for energy efficiency and reduction of earthquake risks in Italy. It will be valid for expenses incurred from July 1, 2020 to December 31, 2021 and reimbursed as a tax credit. The government hopes to boost the recovery of the economy and the Italian construction sector in particular.
Poland ahead of its European competitors
Poland seems to have restarted since late May - early June. Demand for real estate is high, driven by the service sector and by an increase in the purchasing power of its population which will be 4.2% in 2020 (against 7.5% initially forecasted).
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