Market environment

Stable business climate

As in previous years, the construction industry in 2017 was shaped by developments that varied by region. The market environment was slightly more positive overall than in the previous year.

In November 2017, Euroconstruct forecasted an increase in building construction for Europe in 2017 of +3.9% – significantly higher than the figure of +3.1% forecasted in the status report in mid-2017. A comparison with older forecasts explains the more positive outlook: at the end of 2016, Euroconstruct still expected building construction to increase by a mere +2.2% in 2017. At +6.5%, new construction reported stronger growth in 2017 than renovations (+1.7%). However, the volume for new buildings still lagged a long way behind the record highs of 2007/2008 in 2017, whereas renovation volumes were almost on a par again with the level seen at that time – or even slightly above in the case of the residential segment. At +4.7%, residential construction was the growth driver for building construction in 2017. The following countries that are important to Geberit in terms of sales did well in 2017: the Netherlands and the Nordic Countries (+6.9% each), France (+4.2%), Austria (+2.7%), Germany (+2.5%), Belgium (+1.7%), Switzerland (+1.6%) and Italy (+1.5%).

Construction output and Geberit net sales in Europe 2013–2017

(Index: 2012 = 100)

Of the total European construction volume of EUR 1,503 billion in 2017, 80% was generated by building construction. The ratio of residential to non-residential building construction remained the same at around 60 to 40%. In spite of stronger growth, new construction as a share of total building construction continued to lag behind the renovation business in 2017.

Total construction output Europe 2017

(EUR 1,503 billion)

In the US, gross domestic product (GDP) rose by 2.3% and the economy grew faster than in 2016 (+1.5%). Investments in building construction increased by 4.9% according to the latest available figures for the US construction industry as published by the U.S. Department of Commerce, United States Census Bureau. Within building construction, investments in non-residential construction increased by 2.0% in total, which was less than in the previous year (+7.5%). This development was supported by the hotel and commercial buildings sector. The health care/hospitals and schools/universities segments, which are important for Geberit, developed with +2.8% slightly weaker compared to the previous year (+3.4%). Residential construction in the reporting year performed better than in the previous year: the number of building permits for new private residential units increased by 4.8% in the reporting year after the previous year’s performance of 2.0%.

In the Far East/Pacific region, economic growth amounted to +4.9% – a slight improvement on the previous year but significantly higher than global economic growth (+3.1%). At 54% (previous year 62%), more than half of the global growth once again originated from the Far East/Pacific region, where all relevant economies enjoyed positive growth. As in previous years, China contributed around 60% to the growth of this region. The Chinese residential construction sector recovered slightly and recorded moderate growth in both tier one and tier two cities in the second half of 2017 (aforementioned figures in this section covering the world economy and the performance of the Far East/Pacific were published in the October 2017 edition of the IMF World Economic Outlook).