issn 2317-7322 construction industry...

1

0 p.p. month over month

-6 p.p. year on year

Situation in construction industry worsens

Indices of operating capacity utilization (%)Operating capacity utilization fell in companies of all sizes and sectors

-2 p.p. month over month


Construction

55%

58% 56% 58%

58%

58% 60%Small enterprises

Construction of buildings Civil engineering Specialized construction activities

Medium enterprises Large enterprises



0 p.p. month over month








The negative trend seen in previous months in the construction industry worsened even further in August, with all indices falling on a month-on-month basis.

The indicators of activity levels and employment, which were already below the 50-point mark, edged down in August (both of them range from 0 to 100 points, with figures below the 50-point line showing a month-over-month drop). This further decline in the indices, which pushed them further away from the dividing line, reflects a more pronounced slowdown in economic activity and jobs in August as compared to July.

The index of actual-usual activity levels, which indicates whether activity in August is above or below normal levels for the month, stood at 28.5 points in July and fell to 27.2 points in August. In other words, activity has drifted further away from usual levels (the index ranges from 0 to 100 points, with figures below 50 points indicating lower-than-usual activity).

Operating capacity utilization shrank by two percentage points to 58%, the lowest level recorded in the index series started in 2012. This result can be explained by the fact that activity levels have been falling more significantly than previously anticipated by construction entrepreneurs (See the box “Low operating capacity utilization implies higher costs”).

CNI indicatorsISSN 2317-7322 • Year 6 • Number 8 • August 2015

CONSTRUCTION INDUSTRY SURVEY

Note: p.p. = percentage points

2

Construction Industry SurveyISSN 2317-7322 • Year 6 • Number 8 • August 2015

Low operating capacity utilization implies higher costs Operating capacity utilization stood at 58% in August, down by two percentage points from July and by nine percentage points from the figure recorded in August 2014. The August level is a record low in the index series started in 2012.

Unlike manufacturing and mining and quarrying, the construction industry has means to reduce part of its operating capacity (by, for example, demobilizing construction sites and their facilities) and thus adjust it to keep up with expected demand.

However, entrepreneurs have been overwhelmed by higher-than-anticipated declines, thus hindering the effective adjustment. Furthermore, consumer financial problems impose, on construction companies, the need to extent deadlines to deliver their projects. This, in turn, requires keeping idle staff on the payroll for longer periods (as services already contracted out will only be used in the future).

Operating capacity utilization has decreased in companies of all sizes and sectorsIndex of operating capacity utilization in August 2014 and August 2015 (%)

EXPECTATIONS

Expectations for the next six months became even more pessimistic. The indices of expected activity levels, new projects and services, purchases of raw materials, and number of employees fell by between 2.2 and 4 points. As a result of these declines, all indices are now below 40 points. The expectations indices range from 0-100 points, with figures below 50 points reflecting an expected decline. The further away from 50 points, the more pessimistic the expectations.

Increasingly pessimistic expectations Expectations indices*

* The indicators vary in the 0-100 interval. Figures above 50 points indicate an expected increase in activity levels, new projects and services, purchases of raw materials, or number of employees over the next six months.

All indices fell to below 40 points in

September.dividing line

SEP2012

JAN2013

MAY SEP JAN2014

MAY SEP JAN2015

MAY SEP

30.0

40.0

50.0

60.0

67

61

6770

6468 68

5855

5860

5856

58

Construction Small Medium Large Construction ofbuildings

Civilengineering

Specializedconstruction

activities Aug/14 Aug/15

New developments and services Activity level Number of employees Purchases of inputs and raw materials

3

MONTHLY EVOLUTION OFCONSTRUCTION INDUSTRY

Operation CapacityUtilization (%)1 Activity Level2 Actual-Usual Activity Level3 Number of Employees2

Aug/14 Jul/15 Aug/15 Aug/14 Jul/15 Aug/15 Aug/14 Jul/15 Aug/15 Aug/14 Jul/15 Aug/15

CONSTRUCTION 67 60 58 43.0 38.2 36.2 41.4 28.5 27.2 43.5 36.0 34.7BY SIZE

SMALL 61 55 55 44.8 36.7 36.1 42.5 31.5 28.6 44.3 34.8 36.0

MEDIUM 67 59 58 43.1 39.3 36.9 42.2 29.3 27.2 45.0 37.5 35.2

LARGE 70 62 60 42.3 38.1 35.9 40.6 27.0 26.6 42.3 35.6 33.9

EXPECTATIONS Activity Level4 New Developments and Services4

Purchases of Inputs and Raw Materials4 Number of Employees4 Investment

intentions5

Sep/14 Aug/15 Sep/15 Sep/14 Aug/15 Sep/15 Sep/14 Aug/15 Sep/15 Sep/14 Aug/15 Sep/15 Sep/14 Aug/15 Sep/15

CONSTRUCTION 48.4 41.7 39.5 48.5 41.1 37.9 47.5 41.1 37.1 47.7 40.5 37.3 45.0 26.6 26.0BY SIZE

SMALL 52.1 40.4 42.6 51.8 40.0 43.4 50.4 39.2 40.3 50.9 40.6 41.8 48.4 24.9 27.3

MEDIUM 49.0 44.7 39.5 48.6 42.4 37.9 47.7 43.1 38.5 48.2 41.8 38.2 43.5 28.3 25.6

LARGE 46.7 40.4 38.3 47.2 40.8 35.9 46.3 40.7 35.1 46.3 39.7 35.1 44.5 26.3 25.7

CONSTRUCTION INDUSTRY SURVEY | Monthly Publication of the National Confederation of Industry - CNI | www.cni.org.br | Policy and Strategy Unit - DIRPE | Economic Policy Unit - PEC| Executive manager: Flávio Castelo Branco | Research and Competitiveness Unit - GPC | Executive manager: Renato da Fonseca | Team: Marcelo Souza Azevedo and Luis Fernando Melo Mendes (CBIC) | Statistics: Roxana Campos, Aretha Silícia Lopez Soares and Taryane Carvalho Perne | Technical information: +55 (61) 3317-9472 - Fax: (61) 3317-9456 | Graphic design supervision: Carla Gadêlha | Customer Service - Phone: +55 (61) 3317-9989 – email: [email protected] | This publication may be copied, provided that the source is mentioned.

Sample profile: 597 enterprises, including 194 small, 263 medium and 140 large companies. Data collection period: September 1-14, 2015.

Technical specifications

1 The indicator varies in the 0%-100% interval. Series started in January 2012. 2 The indicator varies in the 0-100 interval. Figures above 50 points indicate growth. 3 The indicator varies in the 0-100 interval. Figures above 50 points indicate higher-than-usual activity levels. 4 The indicator varies in the 0-100 interval. Figures above 50 points indicate positive expectations.5 The indicator varies in the 0-100 interval. The higher the figure, the more entrepreneurs are likely to invest.

The September index is the lowest among the industrial segments considered in the survey.

The index for mining and quarrying stood at 45.4 points, while that for manufacturing

reached 39.0 points.

I NVESTMENT INTENTIONS

Investment intentions remain low. In September, the investment intentions index hovered within the margin of error (down by 0.6 points). The indicator, which is now at 26.0 points, reached an all-time low in the series started in November 2013.

* The index ranges from 0 to 100 points. The higher the index, the greater the willingness to invest.

Investment intentions keep fallingInvestment intentions index*

Results by company size

Learn moreFor more information about the survey, including historical series and methodology, please visit www.cni.org.br/sondconstr (in Portuguese only)

i

Construction Industry SurveyISSN 2317-7322 • Year 6 • Number 8 • August 2015

26.0Aug/15

55.2Nov/13

NOV2013

FEB2014

MAY AUG NOV FEB2015

MAY AUG

20.0

30.0

40.0

50.0

60.0

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