Mixed market environment
The construction sector varied from country to country in 2019. In the year-on-year comparison, the market environment was characterised by lower growth.
In November 2019, Euroconstruct forecasted an increase in building construction for Europe in 2019 of +1.5%. At +1.9%, new construction reported stronger growth than renovations (+1.2%). However, the volume for new buildings still lagged a long way behind the record highs of 2007/2008 in 2019. In contrast, renovation volumes – both in residential and non-residential construction – again reached the level seen at that time. With an increase of +1.8%, non-residential construction was the most important growth factor in building construction in 2019. Residential construction increased by +1.3%. According to Euroconstruct, the following countries that are important to Geberit in terms of sales experienced mixed results in 2019: the Netherlands (+3.7%), Austria (+2.7%), Belgium (+2.1%) and Italy (+2.0%) saw strong growth, while Germany saw a minor increase of +0.8%. In contrast, sales in Switzerland fell by -0.5% according to Euroconstruct. Compared to 2018, there was a significant slowdown in growth in most European countries.
Construction output and Geberit net sales in Europe 2015–2019
Source: 88th Euroconstruct conference in Warsaw (PL), November 2019, and 87th Euroconstruct conference in Rome (IT), June 2019
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Of the total European construction volume of EUR 1,637 billion in 2019, around 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 2019.
Total construction output Europe 2019
Source: 88th Euroconstruct conference in Warsaw (PL), November 2019
According to estimates by the Bureau of Economic Analysis, gross domestic product (GDP) rose by +2.3% in the US, meaning the economy grew slower than in 2018 (+2.9%). Investments in building construction fell by -1.6% according to 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 slightly increased by +0.2%, which was down significantly compared to the previous year (+4.4%). While investments in the public security, hotel and office buildings sectors remained positive, the department store/retail sector lagged behind compared to the previous year. The healthcare/hospitals and schools/universities sectors, which are important for Geberit, developed with +1.2% slightly stronger on the whole compared to the previous year (+0.4%). 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 +3.9% after the previous year’s performance of +2.8%.
In the Far East/Pacific region, economic growth amounted to +4.3% – slightly down on the previous year (+4.7%) but significantly higher than global economic growth (+2.5%). At around 60%, more than half of the global growth once again originated from the Far East/Pacific region, where all relevant economies enjoyed positive growth. China contributed around 65% to the growth of this region. As in the previous year, the Chinese residential construction sector continued to grow moderately in both tier one and tier two cities.
In the Middle East/Africa region, economic growth experienced a slowdown as a result of the political uncertainties in the region. At +1.1%, growth in 2019 was significantly down on the figures seen in previous years.
(The aforementioned figures covering the world economy and the performance of the Far East/Pacific and Middle East/Africa regions were published in the October 2019 edition of the IMF World Economic Outlook.)