Construction activity: Building construction shrinks by 3.4% in real terms

The economic figures for the Swiss construction industry paint a mixed picture in the first three quarters of 2024. In nominal terms, an increase in turnover is reported, but taking this into account, there is more of a sideways movement. Incoming orders and work in progress are declining in equal measure.

From January to September, the construction industry generated nominal sales of CHF 17.5 billion, which corresponds to an increase of 0.6 % compared to the same period last year. Adjusted for inflation in line with inflation of 1.1 %, there was a slight decline of 0.5 %. Civil engineering grew by 2.6 % in real terms, while building construction fell by 3.4 %.

Incoming orders fell by 2.5 % in real terms to CHF 17.3 billion compared to the same period of the previous year. According to the SVB, all building construction sectors were affected by the decline. There are several reasons for this: the rise in interest rates in the past, higher construction costs, the sluggish economic situation and an increasing shortage of funds among public-sector clients. In contrast, public and private civil engineering saw an increase in orders.

Increase in housing applications gives hope

The order backlog decreased by 3.7 % to CHF 14.9 billion at the end of September. This corresponds to an order backlog of around 7.7 months. All divisions and regions are affected by the decline. "The outlook for the coming quarters is somewhat gloomy," writes the SIA in a press release. The construction index suggests that construction activity will move sideways or even decline in the coming quarters, depending on the sector. Residential construction, for example, is not expected to show positive growth rates again until the third quarter of 2025. "It will probably take that much time for the recent increase in housing applications to actually translate into the urgently needed construction activity." (aw)