Turnover generated by the construction sector fell by 2.4 percent in the second quarter. The downturn was very obvious in medium-sized and large companies; small businesses performed better than in the second quarter of 2013.
Slump medium-sized and large construction companies, turnover growth for small businesses
Construction turnover was 2.4 percent down in the second quarter of 2014 from the same period last year. The downturn was recorded across all branches in the construction sector: residential and non-residential building, civil engineering, specialised building companies and medium-sized and large companies. Turnover realised by medium-sized companies in residential and non-residential building declined by 3.7 percent to only 59 percent of the turnover level reached in record year 2008.
Only small businesses – including many self-employed without personnel – achieved turnover growth. The low VAT rate on labour costs for repair and renovation projects boosted small businesses. With a turnover growth of 3.4 percent, small businesses specialised in completion benefitted most from the low VAT rate; small businesses active in residential and non-residential building boasted a turnover growth by no less than 6.6 percent.
Turnover by company size
Slump reflects developments in the past
The downturn is substantial, but not entirely unexpected. In 2013, house sales and the total building sum of new orders received by architectural firms were at a low. New orders are at the beginning of the building cycle and therefore an important indicator for future building activities. In the second half of 2013, the overall value of building permits reached the lowest level in many years.
As a result of these developments, the order books of construction companies were less well filled. Due to the mild weather conditions in the first quarter of 2014, building activities were not interrupted and the effects thereof became evident in the second quarter.
Building permits and new design orders for architectural projects
Some signs of improvement
There are some signs of improvement. The total building sum of new architectural projects has risen since the autumn of 2013. The overall value of building permits is increasing and house sales were also on the way up during the first six months. Although building contractors are not very positive about their order books in the second quarter, their order positions are improving after having reached the lowest level in the first quarter of 2014.
Order positions construction firms
Carlo Driesen and Shanti Jhagroe