The building trades growing in the 1st quarter of 2022 despite an uncertain context and the threat of inflation

Despite the encouraging economic climate, CAPEB nevertheless remains very concerned for the coming months due to the continued rise in the cost of materials (+18% in the 1st quarter of 2022) and energy as well as tensions on the supply of materials. and equipment. The building trades, which created 26.000 net jobs on the labor market in 2021, could create just as many in 2022 if activity remains favorable throughout the year.

For Jean-Christophe Repon, President of CAPEB: “While the activity indicators for this 1st quarter are green, the economic and geopolitical context remains a source of great concern for craft building companies. They are impacted by the consequences of the war in Ukraine, like many, particularly in terms of supplies and prices. That being said, they are still showing growth at the start of the year. Our objective in 2022 is to maintain their activity and their jobs. We are working on solutions to help them and will make proposals within the framework of the Assises du bâtiment announced by Bruno Le Maire during our Congress on April 22, and which we are looking forward to”.

First-quarter 1 outlook: encouraging growth

Overall activity in the building trades: the overall activity of the building trades companies recorded an increase of +3,5%, compared to the same quarter of the previous year.

Growth in new construction – With +3% growth (as in the 1st quarter of 2021), new construction is progressing, particularly in single-family homes. A positive economic situation driven by housing starts up by +12,8% (390.700 housing units, i.e. 44.200 more than in the 1st quarter of 2021). Another favorable indicator is the number of authorized dwellings, up 24% over the year in February 2022 (484.000 dwellings were authorized for construction, i.e. 93.700 more than during the previous 12 months).

Nevertheless, these positive figures must be assessed in the light of the level of activity for the reference period (March 2020 to February 2021) which was particularly low due to the first confinement where authorizations had fallen sharply and where many construction sites did not could not start. Added to this is the entry into force of the 2020 Environmental Regulations on January 1, 2022, which caused an exceptional number of authorizations for individual housing granted in February 2022 (+20,5%), following the permits filed in December 2021.

Continued growth in the old sector – Maintenance-renovation activity recorded growth of +4% compared to the 1st quarter of 2021 and benefited from the dynamism of energy performance work on housing, which increased by +4,5% in the 1st quarter of 2022 supported in particular by aid from "MaPrimeRenov'".

Regional activity – In the first quarter, the growth differences between the regions increased slightly and stand between +2% and +4,5%. The PACA-Corsica region, with an increase of 2%, is slightly behind the national average. On the other hand, five regions posted increases above the national average: Brittany and Centre-Val de Loire (+4,5%), but also the Grand Est, Hauts-de-France and Nouvelle-Aquitaine ( +4%).

Overall activity of the building trades

• in volume +3,5% in 1Q2022
• Annual trend: +11,2% (from 1Q21 to 1Q22)

Housing Energy Performance Improvement Works

(change in volume of craft building companies)

• +4,5% in 1Q2022
• Annual trend: +14% (from 1Q21 to 1Q22)

New construction

(change in volume of craft building companies)

• +3% in the 1st quarter
• Annual trend: +9% (from 1Q21 to 1Q22)

Maintenance-improvement

(change in volume of craft building companies)

• +4% in the 1st quarter
• Annual trend: +12,5% (from 1Q21 to 1Q22)

Building trades in the regions

• +3,5% in 1Q2022 ((from 1Q21 to 1Q22)

Building trades in the regions

• +3,5% in 1Q2022 ((from 1Q21 to 1Q22)

Employment remains dynamic

The building trades created 26.000 jobs on the labor market in 2021 and could create just as many in 2022 if activity remains favorable until the end of the year and if the obstacles to its development are lifted, start with the simplification of administrative and regulatory procedures.

Hiring intentions: the trend at the start of the year was rather favorable to job creation. However, even if the number of companies planning to hire or keep their jobs was significant at the end of 2021-beginning of 2022, the war in Ukraine and its consequences could lead professionals to be more cautious with regard to their recruitments. .

Price increase and supply difficulties (CAPEB/Xerfi study April 2022)

Consequences of a combination of several factors (health crisis, war in Ukraine, etc.), the rise in energy prices and supply difficulties continue to weigh on the building trades business. In order to concretely measure their consequences, CAPEB wished to renew in April 2022 the study that it had already carried out in July 2021 and January 2022 with 1.700 craft building companies.

The results show a sharp acceleration in the average rise in the price of materials in recent months (+18% in the 1st quarter of 2022). Once again this quarter, carpentry and locksmithing is the activity which experienced the strongest increase (by +21,5%), caused in particular by the surge in the price of wood and steel. If the increase affects all companies, only 60% of them say they pass it on, at least in part, to their customers (compared to 45% in January 2022). Indeed, on average, these companies do not pass on all the increases but do so by 43% (compared to 33% in January 2022). For information, on average, the weight of the purchases of materials and equipment represents 30% of the costs of a building company.

56% of companies say that lead times and material shortages cause production and organizational difficulties, including schedule changes and team reorganizations. However, the companies questioned remain rather optimistic: 53% of them declare that they foresee stable activity in the next 6 months, 31% declare an increase in activity and 16% a decrease in activity.

Construction industry situation in the 1st quarter of 2022, additional findings:

• The growth in activity at the start of the year is benefiting all trades with growth of between 3 and 4%. Electrical work posted the most dynamic growth with 4%, while the increase reached 3,5% (in line with the national average) for carpentry-locksmithing, fittings-decoration-plasterwork and masonry. Roofing-plumbing-heating work experienced slightly more moderate growth with an increase of 3%.
• The cash position of craft building businesses is deteriorating: the balance of opinion stands at -12 points with 20% of businesses declaring a deterioration in their cash position and 8% an improvement. It should also be noted that 15% of companies report cash needs (compared to 8% in the same quarter of the previous year) and 62% of them declare a need of more than €10.000.
• The number of days of order books amounted to 103 days at the beginning of April, an increase of 12 days compared to the same period of the previous year. This trend suggests good business momentum for the coming months despite a number of pressures on production.
• In the 1st quarter of 2022, 40% of companies declared a fall in margins, against 5% an increase, i.e. a balance of opinion of -35 points, a sharp drop compared to the same quarter of the previous year (-1 point) .
• A stable balance of opinion on subcontracted work: while remaining lower than its value at the start of 2021, the weight of companies carrying out subcontracted activity stabilized at 14%, i.e. a value comparable to that of the first quarter of 2020.
• 19% of companies say they work for local authorities (compared to 14% in the first quarter of 2022).