In comparison to all other international areas, the Middle East and Africa produced the highest CAI reading during Q4; the headline index increased from +20 to +25. The CAI (now at +13) has declined in each of the last three reports, down from a recent peak of +38 in Q1 2022. Construction activity is nevertheless increasing throughout the Americas.
At the global level, the Q4 net balance of +23% is up from a reading of +14% beforehand, with a similarly positive picture for output growth reported in MEA (+27%) , APAC (+27%), the Americas (+24%) and Europe (+16%).
In terms of factors holding back activity and growth across the industry at present, At the global level, 83% of survey participants cited the cost of materials to be the reason. Even though the share of respondents reporting such issues has fallen slightly in each of the last three reports (from a high of 91% back in Q1), material costs clearly remain a significant impediment.
Although still elevated, projections for construction cost inflation have been trimmed somewhat in most parts of the world relative to the feedback received earlier in 2022. The global average projection was revised downward to 7% from Q3 and Q2 expectations of 7.5% and 8%, respectively.As this is going on, estimates for the cost of trained labor have not been changed; respondents globally still expect these prices to rise by 6% in the coming year.
Subodh Dixit, FRICS, Executive Director & President – Engineering & Construction, Shapoorji Pallonji & Co Pvt. Ltd, said in a statement, “India has the right environment and sentiments to grow at 10% for next twenty years and more, and the construction industry is going to be a prime mover in achieving this dream. However, to reach our desired potential, the focus must be on the development of project management skills, productivity improvement and a big leap into effective use of the internet of things and artificial intelligence tools. RICS, with its vast experience globally, is uniquely positioned to be a change agent.”
The Q4 2022 GCM results for APAC show construction activity picked up slightly in the aggregate, with the headline. Construction Activity Index (CAI) improved modestly from -1 to +7. The CAI readings for India and Singapore remain firm, with moderate easing compared to Q3 (+53 to +44 and +31 to +30 respectively).The infrastructure workloads metric outperforms the other two sectors across the region, this is the case in almost all markets, most notably in India (+74%) and Australia (+64%).While the cost of materials has become a holding back factor for growth and activity, and the labor costs have not been revised down, overall, it is a positive narrative of Q4 global balance to rise and rise in output growth.
