The construction materials market rebounded in the 1st quarter, reassuring the construction industry

This bias will also be amplified next month, the comparison with April 2020, almost at a standstill due to confinement, artificially enhancing the trends. But the rebound observed in January-March does not appear only “mechanical” and seems to reflect the continued recovery of activity, the volumes of aggregates and ready-mixed concrete also increasing compared to the fourth quarter.

On the construction side, the signals are turning green: housing starts are picking up, especially for single-family homes, which are performing well. The optimism of building professionals is confirmed, their order books are at their highest, and developers have seen a sharp increase in demand for housing since January.

Finally, on the TP side, a certain revival of activity is taking shape and order books are slowly being replenished.

An above average month of March

Provisional data for March shows a strong rebound in materials activity. Compared with March 2020, which is partially “confined”, aggregate production jumped + 78,5% but also climbed + 8,2% compared to February (CVS-CJO data).

Beyond the base effect, activity in March appears to be sustained since it is 3,8% higher than an average March over the past twenty years. Thus, in the first quarter, the production of aggregates recorded an increase of 13,9% over one year but also of + 2,4% compared to the fourth quarter.

Cumulatively over the last twelve months, the slide now stands at -1%. On the BPE side, the jump was also marked with an increase in delivered volumes of + 124,8% compared to March 2020 and + 7% in one month (CVS-CJO).

Compared to March 2019, deliveries are 12% higher, which also suggests a catching-up movement.

In the first quarter, deliveries thus increased by + 19,4% over one year and by + 1,6% compared to the previous quarter.

Cumulatively over twelve months, volumes are almost stabilized at their level of the previous twelve months (-0,1%).

The materials indicator describes the same trends with an acceleration of more than 20% over one year during the first quarter (CVS-CJO data, provisional), the rebound also being observed in the concrete products sector, in particular those at destination TP.

Good performance of the activity in the building

As in previous months, building contractors, interviewed in April by INSEE, show their optimism about the activity to come. Whether it is about the general outlook or their own activity, the balances of opinion are at levels well above the long-term average and, as a corollary of this observation, their hiring forecasts continue to improve.

The balance of opinion on the planned workforce has almost returned to its very high levels before the health crisis, while the evolution of past numbers is progressing. It is true that the order books are reaching high points hitherto unknown in the building industry (9,1 months of work, that is to say as much in the shell as in the finishings) and that the production bottlenecks continue to multiply.

More than half of entrepreneurs (54,4%) cannot increase their activity due to lack of personnel and 68,3% of them find it difficult to recruit. Recent activity therefore remains very dynamic but shortages of materials and others The current difficulties in supplying construction sites risk slowing down the pace and increasing tensions a little more, with, as a result, an artificial extension of the books.

These indicators will need to be closely monitored in the surveys in the coming months to avoid any overinterpretation of trends. As for construction activity, it is true that housing starts, published by the SDES, strengthened during the first quarter of 2021 compared to the previous quarter (+ 3,2%, CVS-CJO data) . Compared to the first quarter of 2020 (with a very favorable base effect in March due to the start of confinement), the homes started would have climbed by + 11,9% (including + 19,8% in the pure individual segment and + 9,8% in the collective).

At the end of March, cumulatively over one year, there were 366 housing starts, a decline of -000% year-on-year. The diffuse sector single-family homebuilders' March figures confirm this market awakening with sales rebounding in the first quarter and a year-over-year uptrend in the market.

Moreover, housing permits for pure and grouped individuals progressed well in the first quarter (+ 14,8% and + 5,7% respectively) while, for the whole of residential, it still shows a decline of - 2,3% over one year, which leaves the cumulative over twelve months at -15,6% (ie 384 authorizations). It is true that the individual market benefits from several support factors: starting with the attachment of households to this type of housing, which has undoubtedly been further reinforced with the episodes of confinement; credit conditions, then, which remain exceptional with declining interest rates (to 300% in April, a historic low) and extended loan terms (around 1,07 months).

Thus, the tightening of the conditions for granting loans, recommended by the HCSF at the end of 2019 and then relaxed at the end of 2020, has for the moment been able to be amortized by the strength of the banking offer ... but it will become legally binding for banks as of July 2021.

The demand for single-family homes could therefore remain strong at least until the summer, benefiting from still very favorable banking conditions and real estate prices which may then rise with the arrival of new regulations (RE2020, ZAN) and the shortage of materials. Surveyed in April by INSEE, developers confirmed this upward trend in demand for housing from households, stressing that the personal contribution of potential buyers had also increased in recent months.

TP: the outlook is improving

Questioned in April by the FNTP, public works contractors are more optimistic than in January on their future activity: the balance of opinion has thus returned above its long-term average, in particular for activity with private customers even if the recovery also continues to take place with local communities.

Side order books, they are also considered more filled than in January. However, the lack of demand remains the main obstacle limiting the activity of companies (for 44% of them against 46% in January) even if labor constraints are reappearing (27% against 20 % in January) encouraging business leaders to increase their future workforce.