Construction sector optimistic for 2017 as Ready-Mixed Concrete Index starts year strong

Turkey Ready-Mix Concrete Association (THBB) has released its January 2017 report on the "Ready-Mix Concrete Index," which it compiles monthly to measure sector activity, confidence and expectations. The Ready-Mix Concrete Index rose to 99.78 in January, up 1.2% from December. Through the Ready-Mix Concrete Index, Turkey Ready-Mix Concrete Association presented current conditions and expected developments in the construction sector and related manufacturing and service industries. In the Ready-Mix Concrete Activity, Confidence and Expectations Indices in the first month of the new year, while a recovery was observed compared to the previous month, it was noted that it is difficult to say this signals an improvement, and at this stage it cannot be considered a signal of recovery in the ready-mix concrete and construction sectors.

Confidence Index showed limited growth

In January, the Confidence Index rose 0.8% compared to December. However, the value of the Confidence Index continued to show that confidence in the economy within the ready-mix concrete sector remains quite limited. While 77% of survey respondents stated they were not considering new investments, the proportion considering new employment remained at 3%. Additionally, 29% of participants expecting a decline in employment indicated the Confidence Index rose compared to December.

Activity Index showed partial growth

The limited 0.4% increase in the Activity Index pointed to very marginal movement in construction activities and ready-mix concrete production in January. While 80% of surveyed firms stated their sales declined in January, 10% reported increased sales. The high proportion of those reporting declining sales in the Activity Index, which rose compared to the previous month, demonstrated that production in the sector still remains below desired levels.

Future expectations reached a peak

The Expectations Index, which is of great significance in showing the direction of the coming period, rose 2.4% in January, making it the indicator with the highest growth rate in January. The fact that 61% of survey participants expect sales to increase while 16% expect a decline revealed that expectations for the coming period contain significantly greater optimism compared to the previous month.

Ready-Mix Concrete Index closed January with growth

The composite Ready-Mix Concrete Index was positively affected by these developments and closed January with a 1.2% increase. The Ready-Mix Concrete Index, which tracks below the threshold of 100, rose from 98.57 to 99.78. Yavuz Işık, Chairman of the Board of the European Ready-Mix Concrete Association (ERMCO) and THBB, commenting on the results of the Ready-Mix Concrete Index January Report, stated that the fact that all 3 index values remained below the threshold of 100 in January demonstrates that current and expected developments in the ready-mix concrete sector remain far from desired levels. Yavuz Işık made the following assessments regarding the report, which was more optimistic than December 2016: "In the report, we see that the Ready-Mix Concrete Index, which declined in the last quarter, has experienced a partial recovery. The fact that 3 of the 4 indices other than the Ready-Mix Concrete Expectations Index remained below the 100 threshold in January shows that the activity level in the ready-mix concrete sector is below desired levels, but this is not a pessimistic situation. A recovery compared to the previous month was observed in the Ready-Mix Concrete Activity, Confidence and Expectations Indices in the first month of the new year. The Activity Index, which shows the current level of activity in the sector, remains the lowest among the indices and has shown quite limited recovery compared to December. Following the lowest value in December, minimal movement was observed in construction and ready-mix concrete in January. However, it is not considered possible at this stage to view these partial increases as a signal of recovery in the ready-mix concrete and construction sectors. In January, 48% of respondents reported deterioration in the collection process. Following the 50% rate in December, the decline of this rate to 48% in January can be considered a positive development for the sector."