Skip to main content

European Construction Equipment Market Continues to Struggle in 2024 and Beyond

Commercial Vehicles

July 2024

Alexander Jones

Alexander Jones

Data Analyst - Commercial Vehicles

A thoroughly professional, analytical, and highly educated researcher, Alexander gained his analysis and modelling skills from a PhD in Astrophysics. He works as a Data Analyst with a focus on both off and on highway commercial vehicles.

This is the third of a series of insights examining the state of the construction industry at a regional level and utilizing data from the new Interact Analysis Construction Barometer data visualization service. For more information about the Construction Barometer, please get in touch with Alexander Jones.

Introduction

In this insight, we will be looking at a small selection of data sets and visualizations from the European edition of the Construction Barometer. This is an interactive Power BI file that lets the user explore and compare data related to the European economy, changes in construction output, and general sentiment within the construction industry. All figures shown are screenshots taken directly from the Construction Barometer.

The European Union

Production in construction dashboard for EU. Data Source: Eurostat

The image above is a screenshot from the “Production in Construction” dashboard, which shows production indexes (2021 = 100) for various European countries and sectors, taken from Eurostat. These indexes measure changes in the volume of construction output (i.e. company revenue), after accounting for the effects of price changes. The line chart in the dashboard is currently filtered to show a 12-month rolling average for the total construction sector for the EU. From the start of 2022 to the end of 2023, production has increased slightly (by around 4%), albeit at a steadily decreasing rate. However, in the first 3 months of 2024, production has decreased each month, in line with recent unfavorable economic conditions (low GDP growth, high interest rates etc.).

Construction survey dashboard for EU. Data Source: European Commission

This snapshot is taken from the “Construction Survey” dashboard, which uses data from the European Commission’s Business and Consumer Survey for the construction sector. Displayed in the line chart is the 12-month rolling average for the Confidence Indicator – a combination of responses related to the current situation for order books and employment. Values above zero indicate more positive responses from survey participants, while values below zero indicate negative responses. For the EU, the measure indicates confidence in the construction sector has been steadily decreasing since mid-2022, with generally more negative responses than positive ones from May 2023 onwards.

Respondents are also asked to list the main factors currently limiting their building activity. Looking at the pie chart above, the highest response is “Insufficient demand”, followed by “Shortage of labor force” (ignoring the “None” option). This can be compared with responses given at the start of 2022, where “Shortage of labor force” was the highest response, followed by “Shortage of materials and/or equipment”. Meanwhile, “Insufficient demand” has seen the highest increase over this period.

Conditions worsening for Sweden’s construction industry

Left: Construction production index for Sweden. Data Source: Eurostat.
Right: Building activity limiting factors for Sweden: Data Source: European Commission

Sweden’s construction industry has had a rough time over the past couple of years. The production index (12-month rolling average) for construction overall has steadily fallen since the end of 2022, dropping by around 7% from March 2023 to March 2024. During this period, construction of buildings has fallen by 13%, while civil engineering has risen and fallen, ending at around the same level.

If we look at the main reasons limiting building activity given by employees in the Swedish construction sector (12-month rolling average), you can see that at the start of 2023, labor and material shortages were the biggest concern. However, in March of this year, insufficient demand was by far the most important factor. Putting these two graphs together, clearly there isn’t large enough demand for constructing new buildings in Sweden. This hasn’t been helped by high interest rates and inflation, with a growing number of people choosing financial constraints as a factor that is limiting activity.

To end on a slightly less gloomy note, Sweden’s construction confidence indicator has been fairly flat over the past 10 months, at a level of around -28. While this is well below zero and means that respondents’ opinions of the construction industry is still pretty negative, the fact that it has stopped decreasing is a reason for cautious optimism. Also, the number of people giving insufficient demand as a response in the more recent surveys looks like it’s starting to level off – perhaps demand is due to pick up again in the near future?

Outlook improving for Croatia’s construction industry

Left: Construction production index for Croatia. Data Source: Eurostat
Right: Building activity limiting factors for Croatia: Data Source: European Commission

One European country where the construction industry appears to be having a better time is Croatia. Its construction production index has increased by nearly 20% from March 2022 to March 2024. This has largely been driven by various government initiatives, as well as increases in the tourism sector. General confidence in the construction industry has been positive since mid-2021, and is almost at the same level as it was pre-pandemic. Croatia ranks second, only behind Spain, in terms of the highest confidence indicator registered in May 2024 in Europe. Looking at some of the reasons given that are currently limiting building activity, shortage of labor is clearly the main issue, while insufficient demand is one of the least significant.

Effect on the Construction Vehicle Market

With construction output in the EU predicted to slow down this year, this will no doubt have an effect on the construction vehicle market. According to Interact Analysis’ latest Off-Highway Vehicle research, the number of construction and road building vehicles sold in EMEA in 2024 will be 4.7% lower than in 2023.

For more information on the latest construction equipment market research, including forecasts at a machine type, region, powertrain type and power rating level, please visit our webpage.

The Interact Analysis Construction Barometer is a new way of tracking construction activity and sentiment across multiple countries in one single, easy to use source. You don’t need to integrate data from multiple, hard-to-find sources – we do that for you. We have created a range of ‘pre-built’ analytics to help you easily digest the information and bring it into your organizations’ existing workflows. The Construction Barometer can help identify the best regions and sectors to target, while avoiding the worst of the downturn in the EU this year. It can also be used to uncover hidden areas of potential growth that you may not have even known existed, unlocking new opportunities.

For a free demo, please get in touch with Interact Analysis Data Analyst Alexander Jones.

Leave a Reply