Construction industry shows lowest annual sales since 2015

Due to the Corona pandemic, the main construction industry has already lost 1.2 billion Swiss francs in sales since the beginning of the year. Added to this are costs for safety measures and lower productivity. This is shown by the latest quarterly survey of the Swiss Association of Master Builders (SBC). After the easing measures in the summer, there are at least initial signs of a certain stabilization on the market, it continues. With the 5-point plan, public builders could have been motivated to accelerate planning work, approval procedures and awards. However, some public builders are still reluctant to support the economy by awarding contracts, regrets the main construction industry association. Based on the joint construction index with Credit Suisse, it expects total annual sales of just over CHF 19 billion this year, around 7% less than in 2019, which would be the lowest level since 2015.

Residential and commercial construction continue to show decline in sales

Total sales in the main construction sector fell by -11% in Q3 2020 compared to the same period last year. The residential construction division had experienced a sharp correction in Q2, with its sales falling dramatically by -27% to 1.3 billion Swiss francs. Meanwhile, in the current quarter, its sales increased slightly to 1.4 billion Swiss francs, but this still represents -18% compared to Q3 2019.

Signals for recovery in the market

Nevertheless, the first tentative signs of recovery can be discerned in the market. Commercial builders were also more confident from July to September, i.e. even before the second Corona wave. They placed more construction orders again (+11%) and restarted temporarily halted construction projects, so that the commercial construction division was able to stabilize its sales to some extent in the 3rd quarter at -3% after the sharp drop in sales of -17% in the 2nd quarter (compared with the respective prior-year period).

Nearly six percent fewer orders for public civil engineering in the main construction sector

It is also encouraging that the appeals of the five-point plan are having some effect. The plan calls on public builders to clear the way for construction projects without the need for new funds. However, too many public builders are still hesitant to award contracts. Since the beginning of the year, new orders remain -3.5% below the prior-year level. In the important public civil engineering sector in particular, the decline is still large at -5.5%. Cantonal contracting authorities in particular can cushion the recession and preserve jobs by speeding up planning work, approval procedures and contract awards. This means that public builders should process and bring forward orders that have already been planned instead of putting the brakes on them. They must also find ways to process private building applications quickly so as not to block the relevant construction projects arbitrarily.

Source: Swiss Association of Master Builders