ANNUAL ECONOMIC
REPORT Dear reader,
No.10 M A R C H 2024
Executive Summary CONSTRUCTION INDUSTRY
Welcome to the CECE Annual Economic Report! A year of two halves – this is what 2023 was all about! Indeed, in terms of economic performance, 2023 was divided into two different semesters with diverging trends: substantial stability in the first half and visible decline from the summer till the end of the year. What materialised at the end cannot be defined as a soft landing, but it was certainly not alarming, most of all coming from very high absolute numbers of end-2022. The report you are reading contains an in-depth analysis of the macroeconomic situation in Europe, insights into your major client sectors and a substantial focus on the sales performances of machinery and equipment. The snapshot of this year’s report features another important client sector in Europe. On page 12 you will read an interview with the Secretary General of ELCA, the European landscape contractors association. The business sentiment that we gauge monthly through the CECE Business Barometer has moved into negative territory during 2023 and the trend is definitely pessimistic. Order books are close to empty, employment plans confirm the industrial challenges for our member companies and sales projections are negative for 2024. It is now difficult to make a numerical forecast for 2024, but the Equipment Market chapter in this report will provide some relevant market intelligence for companies and investors to ponder. Please share this report within your network without moderation! Indeed, as a publicly available source of information, the CECE Annual Economic Report helps to promote the knowledge and understanding of the sector amongst the wider audience. Comments are always welcome and can be directed to info@cece.eu. If you want to get an overview of the report before reading it, please take a look at this video. We strive to provide CECE members and the public with all relevant information and intelligence, produced by our own team of economists. Indeed, this report is produced by a small group of experts from the CECE member associations and the CECE team in Brussels. Please read more about them on page 14. The report also includes information provided by our national member associations, shedding light on specific market developments. I hope you will enjoy reading the report!
European construction activity remained resilient during 2023 despite the headwinds created by higher financing costs, input cost inflation and labour shortages. This resilience is expected to continue in 2024, although the outlook varies by country and sector.
MINING INDUSTRY
Exploration and drilling activity in the global mining market reached peak levels in 2022. Exploration budgets for the major global mining companies exceeded 2020 and 2021 levels, and reached the highest levels seen since 2013. However, in 2023 drilling activity has been on a downward trend and by the end of the year had reached the lowest levels since 2020.
EXTRA FEATURE: RENTAL INDUSTRY
The ERA/IRN Rental Tracker indicates the noticeable deterioration in business sentiment in Europe’s equipment rental industry from the middle of 2023 continued through to the end of the year, although it is a far from dramatic decline.
EQUIPMENT MARKET
2023 was a year of transition for the European construction equipment sector. Amid a severe downturn within the building construction industry and an increase in geopolitical crises, new order intake for equipment went down significantly. However, sales on the European market were still comparably stable – with notable differences across subsegments and regions. This was primarily due to the strong order backlog built up in 2021/2022, but which has now been exhausted.
OUTLOOK
Riccardo Viaggi CECE Secretary General
March 2024
It is encouraging that cancellation of orders is not significant within Europe. In addition, levels of inventory have increased, but are not at extraordinarily high levels. As machine delivery times are no longer an issue, the ordering behaviour of end-use customers has returned to a much more short-term pattern. This suggests that current low order volumes may only be temporary, and the situation should pick-up during the course of the year.
CECE ANNUAL ECONOMIC REPORT
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