Construction confidence drops in October

03 November 2016

Worst month on record as cash-flow concerns resurface

There was a sharp dip in confidence in October, with the MEED Construction Market Index (CMI) scoring 50.66, down from 56.36 in September. The score is the worst registered since the index began in July and down on the average score of 56.03 for the previous three months.

MEED CMI

MEED CMI (July - October)

A score above 50 indicates the overall market conditions for the construction sector are improving, whereas a score below 50 indicates market conditions are worsening. The index is generated by collecting data from construction companies on five key metrics: turnover, backlog/order book, headcount, cash flow, and outlook for the next six months.

Five Metrics

Five metrics

The only one of the metrics surveyed in October to register a positive score was the market outlook, which scored 60 – a slight improvement on the score of 59 recorded in September.

The scores for the other four metrics – turnover, backlog, headcount and cash flow – were all neutral or negative during October.

Metrics over time

Metrics over time

Backlog and cash flow performed the worst, with both scoring 46.67. For backlog, while still negative, the result was an improvement on the 45.45 registered in September. For cash flow, the score of 46.67 was a sharp decline from the score of 59.1 recorded in September as construction companies hoped concerns about payments were starting to finally recede, after negative scores in July and August. In July, cash flow scored 38 – the worst score for any metric since the index began.

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