The MEED Construction Market Index (CMI) turned negative for the first time in November with a score of 49.3.
The score is down marginally on the 50.7 recorded in October. With an average monthly score of 56.03 during the third quarter of this year the index suggests that construction companies are finding the market increasingly difficult as the end of the year approaches.
MCI July-November 2016
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.
MCI November 2016
The worst performing of the five metrics surveyed in November were turnover and backlog which were both below 40.
Both of these metrics suggests that firms have been busy completing projects, while at the same time finding it difficult to replace the work they have finished with new orders.
The one positive metric was headcount, which registered a score of 55, and cashflow and outlook remained the same.
Cashflow has been a major concern for construction companies throughout the year and in July, it scored 38, the worst score of any metric since the index began. Since then the issue appears to have stabilised, following public announcements by the government in Saudi Arabia that is will pay unpaid bills by the end of this year.
MCI Five Metrics July November
For the short term outlook much depends on Dubai. During the first half of 2017 the emirate is expected to award a raft of projects that will need to be completed in time for the 2020 Expo.
If the contracts to build these Expo-related projects are awarded swiftly then the market could experience an uplift in early 2017. Alternatively, if they are delayed or plans are rationalised then there will be a dip in sentiment instead.