Wed, Feb 28th 2024
Swiss construction firms predict a downturn in sales due to rising interest rates and escalating construction costs, despite a modest growth in 2023.
Swiss construction companies, reflecting on a relatively successful 2023, are gearing up for a challenging year ahead. Despite a 0.7% increase in sales to CHF 23.4 billion last year, the industry is poised for a slowdown, with companies forecasting reduced sales triggered by soaring interest rates and construction costs.
The increase in 2023 sales was overshadowed by a 1.6% inflation rate according to the construction price index, translating to a real-term decline of 0.9%. The final quarter of 2023 saw a 1.1% dip in turnover, amounting to CHF 6.07 billion, indicating the onset of the anticipated downturn.
A concerning trend was the 4% drop in new orders to CHF 22.7 billion, marking the first instance in years where order intake did not match sales growth. Despite this, the industry’s backlog remains robust at 7.5 months, indicating a short-term cushion against the downturn.
The high demand for construction investment persists across apartments, public buildings, and infrastructure. Yet, the industry’s outlook remains cautious for 2024, with projections suggesting a 1.1% decline in turnover to CHF 23.2 billion, as per the construction index.
On a positive note, the construction sector’s labor market remained resilient throughout 2023, with a slight increase in the unemployment rate to 3.4%. The industry maintained an average employment level of 89,000 over the past two years, reflecting stable job conditions despite economic uncertainties.
The Swiss Association of Master Builders (SBV) emphasizes the industry’s intent to retain its workforce amidst the skilled labor shortage, underlining its approach to navigating the anticipated economic fluctuations.
©Keystone/SDA
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