The construction industry in H1 2024 showed weak results in the US, EU and China
Key indicators imply that the US construction industry declined in July due to a high level of uncertainty in the country ahead of the presidential election. The number of building permits issued in July decreased by 3% m-o-m, down 3% y-o-y, although the average index was stable y-o-y for the first seven months of 2024. Also in July, the median listing price per square foot in the US declined by 1% m-o-m, the first dip in the last eight months. However, building and labor costs have maintained y-o-y growth for 12 consecutive months.
Sentiment in the construction industry in the EU is improving, although the construction confidence indicator in the EU remained negative, despite strengthening to -4.7 points in July, compared to -5.5 points in June. Nevertheless, the number of new German building permits fell 6% y-o-y in July and decreased by 11% y-o-y in France. Bearish expectations of market participants are reflected in the downturn in construction.
Construction in China continues to decline, but the rate of decrease in Chinese real estate investment is slowing. From April to July, the rate of decline fluctuated between 5-9% y-o-y significantly below the average decline of 16% recorded in the 2023 calendar year. While the reduction in the rate of decline may be seen as a positive sign, market players who expected the real estate sector to start recovering in H2 2024 have changed their stance, and now expect a recovery in construction to take place in 2025 at the earliest. Thus, one of the country’s key industries is likely to continue to stagnate. Regarding the construction indicators, we note that residential construction projects that commenced within the first seven months of 2024 fell by 23% y-o-y, while the same indicator for commercial property fell by 24% y-o-y for the same period.
Auto production decline in the US and the EU amid export growth in China
Total car sales in the US have been fluctuating in a comparatively narrow range since the beginning of 2023. At the same time, in June and July 2024, total car sales and new car sales showed a y-o-y decline, which raised concerns among market players. If car sales continue to decrease further, it will reflect weakness in consumer demand, which is likely to affect general consumer demand, according to market participants. Looking at the condition of the automotive industry in the US, the first aspect to note is the continuation of the downward production trend, which fell by 11% y-o-y in H1 2024. The main reason for this was a 10% y-o-y increase in car imports in H1 2024, while exports remained relatively stable.
In the EU, new passenger car registrations rose by 20% m-o-m in June, representing a 4% y-o-y increase. However, this is mainly attributable to electric cars. Production of motor vehicles in the EU in June increased by 12% m-o-m, but it was still down 6% y-o-y, and for H1 the decline was 9% y-o-y.
Motor vehicle production in China declined for the first time in 12 months in July, falling by 2.4% y-o-y, reflecting a drop in domestic and export demand. The production of electric cars continued to grow in July, but the rate dropped to 29% y-o-y, compared to 37% y-o-y in June. Overall, China’s car exports grew significantly for the first seven months of the year (exports of motor vehicles increased by 25% y-o-y, exports of electric cars increased by 37% y-o-y). Thus, the Chinese automotive industry continues to ensure high export growth and, consequently, growth of the country’s economy.
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