Building tradespeople face further decline in activity in third quarter of 2024

This deterioration is particularly marked in the new construction sector, where activity fell by -11% in the 3rd quarter after having already fallen by -6,5% in the second quarter of 2024. What alert threshold will need to be crossed so that all stakeholders are finally invited to think together about a rethought housing policy that meets the immensity of needs?

Furthermore, the decline in activity is intensifying for all craft businesses in the building sector, regardless of their size. All trades are impacted, with masonry and carpentry-locksmithing craftsmen, who work more on new construction, experiencing a particularly notable decline (-6% and -5,5% respectively). The entire territory is affected by this decline in activity, with the Ile-de-France and Centre-Val de Loire regions being more impacted than the other regions (-7% and -6% respectively).

The stagnation of new construction confirms an economic model that is running out of steam

The negative trend remains strong for permits and construction starts. Nationally, the cumulative number of authorized and started housing units over twelve months from September 2023 to August 2024 are down by -9,5% and -19,9% ​​respectively compared to the same period the previous year. A poor result linked to the sharp drop in these indicators for individual housing (-23,6% for permits and -33,4% for construction starts). In the third quarter of 2024, the volume of activity in new construction fell by -11% for craft construction companies compared to the third quarter of 2023. The fall in new construction therefore continues from quarter to quarter without anything seeming to be able to stop it.

Renovation work: the downward trend is increasing

Although activity in maintenance-improvement is less degraded than activity in new construction, it is nonetheless down: the maintenance-improvement segment fell by -1% in the 3rd quarter, as in the previous quarter. At the same time, activity in improving the energy performance of housing also decreased year-on-year (-0,5%), this quarter as in the previous quarter. Transactions in old properties, generating work to bring them up to standard, improve comfort and energy performance, are down. From July 2023 to July 2024, cumulative sales of old homes over 12 months fell by 20%.

Faced with this situation, CAPEB warns against the uncertainties of the coming months which could further aggravate this situation and calls for positive and achievable measures within the framework of the draft finance law and the draft social security financing law, aimed at establishing a dynamic and coherent policy at the national level.

Small businesses at the limit of their resilience

In this degraded context, companies' cash flow is also impacted. Indeed, 28% of companies report a deterioration in their cash flow in the third quarter of 2024. In the same quarter, 24% of companies report cash flow needs (compared to 19% in the same quarter of the previous year), for a constant average amount since the beginning of 2024 of €29.000. The decline in activity (for 55% of companies) as well as the extension of customer payment terms (for 45% of them) are the main causes of these difficulties.

Gloomy prospects that call for real awareness from the State

The need to contain the public deficit is now leading the State to have to find 60 billion in savings. CAPEB understands the issues at stake. However, it warns of the harmful consequences that certain budgetary decisions could have on the costs of craft construction companies and on their ability to meet the country's needs in terms of energy renovation and housing accessibility. However, work to improve energy performance continued to decline in the 3rd quarter (-0,5%) while this field of activity should be experiencing strong growth given the needs and challenges.

For Jean-Christophe Repon, president of CAPEB: "Building tradespeople are undeniably a force on which the Government can count. The figures for this third quarter show that they are increasingly weakened by an unfavourable economic situation, the worsening of which must be avoided at all costs. The time for action has come. Priority must be given to creating the conditions for a rapid recovery by involving all stakeholders concerned. The provisions taken in the 3 Finance Bill, such as the abrupt increase in the reduced VAT rate on gas boilers, the reduction in support for companies training apprentices, the increase in their charges, etc., raise questions about how the Government wishes to resolve the economic difficulties of the sector and respond to environmental and societal challenges."

Download the economic report for the 3rd quarter of 2024 – October 2024

Illustrative image of the article via Depositphotos.com.