Market environment

Stable business climate

As in previous years, the construction industry in 2018 was shaped by developments that varied by region. In the year-on-year comparison, the market environment was characterised by slightly lower growth.

In November 2018, Euroconstruct forecasted an increase in building construction for Europe in 2018 of +2.3% – identical to the estimate from mid-2018. A comparison with older forecasts confirms the stable outlook: at the end of 2017, Euroconstruct also expected building construction to increase by +2.3% in 2018. At +3.8%, new construction reported much stronger growth in 2018 than renovations (+1.0%). However, the volume for new buildings still lagged a long way behind the record highs of 2007/2008 in 2018. In contrast, renovation volumes were almost on a par again with the level seen at that time – or even slightly above in the case of residential construction. At +2.8%, residential construction was the growth driver for building construction in 2018. According to Euroconstruct, the following countries that are important to Geberit in terms of sales did well in 2018: the Netherlands (+6.1%), France (+2.6%), Austria (+2.4%), Italy (+1.6%), Germany (+1.4%) and Switzerland (+1.0%). However, growth weakened overall compared to 2017.

Construction output and Geberit sales in Europe 2014–2018

(Index: 2013 = 100)

Of the total European construction volume of EUR 1,563 billion in 2018, 80% was generated by building construction. The ratio of residential to non-residential building construction remained the same at around 60 to 40 percent. In spite of stronger growth, new construction as a share of total building construction continued to lag behind the renovation business in 2018.

Total construction output Europe 2018

(EUR 1,563 billion)

In the US, gross domestic product (GDP) rose by +2.9%, and the economy grew faster than in 2017 (+2.3%). Investments in building construction increased by +3.9% according to figures as of end of November, 2018 for the U.S 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 +3.8%, which was more than in the previous year (+1.2%). This development was supported by the hotel and office buildings sectors. The healthcare/hospitals and schools/universities segments, which are important for Geberit, developed with +2.6% slightly stronger compared to the previous year (+2.0%). Residential construction in the reporting year performed better than in the previous year; however, the number of building permits for new private residential units only increased by +2.8% after the previous year’s performance of +6.2%.

In the Far East/Pacific region, economic growth amounted to +4.6% – slightly down on the previous year (+4.8%) but significantly higher than global economic growth (+3.0%). At 53%, 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 continued to grow moderately in both tier one and tier two cities (aforementioned figures covering the world economy and the performance of the Far East/Pacific were published in the October 2018 edition of the IMF World Economic Outlook).

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