Short-term Europe construction indicators positive, long-term negative – CMCI

LONDON (ICIS)–The short-term outlook for construction was optimistic in January while long-term confidence was down, according to ICIS Chemicals Markets Confidence Index (CMCI) data on Thursday.

This reflects a turnaround from the generally bullish outlook in December, which had an overall increase on all measures for the CMCI.

The short-term optimism may reflect encouraging economic data coming out of northwest Europe at the end of 2016, particularly in Germany, which showed a big rise in home building permits throughout the year.

However, longer-term trends for Europe are more worrying due in part to rising populism in the EU and US, which could threaten the euro and the structure of the eurozone. Concerns about increased protectionism in the US are also making themselves felt in the NWE business climate.

In addition, the UK construction market was affected by the vote to exit the EU in 2016, with the UK Parliament expected to trigger article 50 in mid-2017.

Research firm Savills has predicted flat UK house prices in 2017 and 30-40% lower commercial development activity over the next five years, mostly due to uncertainty in the aftermath of the vote.

The CMCI result this month reflects this mixture of positive short-term trends and long-term uncertainty.

(*Forward-looking data for December was for next 12 months, while from January onwards, forward-looking sentiment will be based on the next six months)

The newly established ICIS Europe CMCI aggregates sentiment from hundreds of petrochemical market players actively involved in price negotiations across more than 60 different markets.

The Europe CMCI runs from +100, to -100, with zero on each index representing neutral, or uncertain conditions, a negative score indicating bearish expectations and a positive score representing bullish expectations. The indices also gather sentiment on the comparison between the current situation and the situation across the past 12 months to give a complete picture of current market conditions and confidence. The information is gathered in the third week of each month.  A full methodology is available on request.

For more details on the overall Europe CMCI data, click here