The sentiment of the region’s construction sector remains subdued with the MEED Construction Market Index (CMI) recording an overall negative result in mid-September.
The score was 49.08 and is a return to negative territory for the index that had shown signs of recovery with positive scores earlier this year.
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.
The two weakest metrics surveyed were cashflow and backlog which both registered scores of 39. Cashflow has consistently been the worst performing metric tracked by the CMI.
After recording strong scores in 2016, backlog’s score of 39 indicates that the market is not offering enough opportunities for construction companies, with many saying they are struggling to replenish their order books.
Turnover and outlook both scored zero.
Outlook tends to be tempered by market conditions as well as broader macroeconomic factors. The positive macroeconomic factors are the signs of progress in Saudi Arabia’s privatisation drive, and Dubai ongoing drive to develop new projects, while downward pressure on outlook has come from the trade embargo imposed on Qatar by Saudi Arabia, the UAE and Bahrain,
Headcount was the only positive result with a score of 56. The headcount score indicates that firms are hiring as new projects are starting, even if this seems to contradict construction companies’ concerns about backlog.