Construction Deals – Q1 2022 Forecasts

The Federation of Crafts and Small Builders (CAPEB) provides activity figures for the first quarter of 2022 for craft builders. After 2021, the first quarter of 2022 achieved dynamic growth of 3.5%, driven primarily by maintenance, refurbishment and work to improve the energy performance of residences. Despite the encouraging economic climate, CAPEB remains very concerned for the coming months due to the continued rise in the cost of materials (+18% in the first quarter of 2022) and energy as well as tensions over the supply of materials and equipment. . The construction trade, which created 26,000 net jobs in the labor market in 2021, could create the same number in 2022 if activity remains favorable throughout the year.

Jean-Christophe Ribon, President of CAPEB stated: “Although the indicators of activity for this first quarter are green, the economic and geopolitical context remains a major concern for artisanal builders. They have been affected by the consequences of the war in Ukraine, like many, especially in terms of supplies and prices. However, they are still showing growth at the beginning of the year. Our goal in 2022 is to keep them active and their jobs. We are working on solutions to help them and we will make proposals within the framework of the Assises du bâtiment announced by Bruno Le Maire during Congress on April 22, which we look forward to ” .

First Quarter 2022 Outlook: Encouraging Growth

General activity in the construction trade: The overall activity of construction professions companies recorded an increase of 3.5% compared to the same quarter of the previous year.

Growth in New Construction – With +3% growth (as in Q1 2021), new construction is progressing, particularly in single family homes. Positive economic climate driven by housing starts, up +12.8% (390,700 housing units, 44,200 more than in the first quarter of 2021). Another positive indicator is the number of licensed dwellings, up 24% over the year in February 2022 (484,000 dwellings were authorized to build, 93,700 more than the previous 12 months).
However, these positive numbers must be evaluated in light of the activity level for the reference period (March 2020 to February 2021) which was particularly low due to the first booking as licenses fell sharply and where many construction sites could not start. Added to this is the entry into force of the 2020 Environmental Regulations on January 1, 2022, causing an exceptional number of permits for individual housing granted in February 2022 (+20.5%), following permits submitted in December 2021.

Continued growth in the legacy sector – Maintenance and refurbishment activity registered +4% growth compared to Q1 2021 and benefited from the dynamism of the housing energy performance business, which increased by +4.5% in Q1 2022 supported in particular with the help of “MaPrimeRenov” .

Regional activity – in the first quarter, the growth differentials between regions increased slightly and stood between +2% and +4.5%. PACA region – Corsica, an increase of 2%, slightly lower than the national average. On the other hand, five regions registered increases above the national average: Brittany and central Val-de-Loire (+4.5%), but also Grand Est, Hauts-de-France and Nouvelle-Aquitaine (+4%).

Work to improve the energy performance of housing

Maintenance improve the scale of building craftsmanship

Craft and construction activity in the regions

Employment is still dynamic

The construction professions created 26,000 jobs in the labor market in 2021 and could create the same number in 2022 if the activity remains favorable until the end of the year and if the obstacles to its development are removed, starting with the simplification of administrative and regulatory procedures.

Employment Intentions: The trend at the beginning of the year was somewhat favorable to job creation. However, even if the number of companies planning to hire or retain their jobs is large at the end of 2021 – the beginning of 2022, the war in Ukraine and its consequences may cause professionals to be more cautious in terms of employment.

Price Increases and Supply Difficulties – CAPEB / Xerfi Study April 2022

The consequences of a combination of factors (health crisis, war in Ukraine, etc.), high energy prices and supply difficulties continue to weigh on the construction trade. In order to concretely measure its consequences, CAPEB wanted to renew the study in April 2022 that it had already conducted in July 2021 and January 2022 with 1,700 artisanal construction companies.

The results show a sharp acceleration in the average rise in material prices in recent months (+18% in the first quarter of 2022). Again this quarter, carpentry and locksmithing was the activity that saw the largest increase (by +21.5%), caused in particular by the sharp rise in wood and steel prices. While the increase affects all businesses, only 60% of them said they pass it on, at least in part, to their customers (compared to 45% in January 2022). In fact, on average, these companies don’t pass all the raises but do so at 43% (compared to 33% in January 2022). For information, on average, the weight of purchases of materials and equipment accounts for 30% of the construction company’s costs.

56% of companies say lead times and material shortages cause production and organizational difficulties, including schedule changes and team reorganization. However, the companies questioned are still somewhat optimistic: 53% of them said they expect stable activity in the next six months, 31% announced an increase in activity and 16% a decrease in activity.

Construction Trading Market – Q1 2022

Additional notes:

  • The growth in activity at the beginning of the year benefits all trades with a growth of between 3 and 4%. The electrical business recorded the most dynamic growth of 4%, while the increase was 3.5% (in line with the national average) for the carpentry business – locks and fixtures manufacturing – decoration – plaster and construction. The roofing – plumbing business – saw slightly more moderate growth with a 3% increase.
  • The cash position of the craft building business is deteriorating: the opinion balance stands at -12 with 20% of companies declaring a deterioration in their cash position and 8% an improvement. It should also be noted that 15% of companies reported a need for cash (compared to 8% in the same quarter of the previous year) and 62% of them declared a need of more than 10,000 euros.
  • The number of order book days at the beginning of April was 103, an increase of 12 days compared to the same period in the previous year. This trend indicates good business momentum for the coming months despite a number of pressures on production.
  • In the first quarter of 2022, 40% of companies reported a decrease in margins for a 5% increase, i.e., Araa balance -35 points, down sharply compared to the same quarter of the previous year (-1 point).
  • Steady balance of opinion on subcontracted work: while it remained undervalued at the beginning of 2021, the weight of companies carrying out subcontracting activity stabilized at 14%, a value similar to that of the first quarter of 2020.
  • 19% of companies say they work for local authorities (compared to 14% in Q1 2022).

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