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Even heated and confident, civil construction has great challenges


The year 2020 represented a turning point for the construction industry. After years of poor results, it began to register growth. In the midst of a pandemic, between the second half of 2020 and the beginning of 2022, it was one of the sectors that most remained warm and confident. Others also registered a significant increase, due to a change in consumption habits, but civil construction had a very particular trajectory.

The same pandemic, however, pressured the prices of materials used in this industry. Metals and resins were a concern, with an impact even on supply. The National Construction Cost Index, from FGV, continues to register an increase, although less expressive.

In May, the activity level of the Construction Industry, calculated by the CNI, was even slightly below 50 points (at 49.5 points), indicating a slight drop, driven by the decline in the Infrastructure Works area (with 47.5 points) . The Industrial Entrepreneur Confidence Index is also positive, above 50 points, in the Construction Industry. Regarding labor, the group with the highest share of residential construction costs, the number of people working in construction has risen 29.8% in the last two years and the sector was one of those responsible for the reduction in the country’s unemployment rate. We can, therefore, have a high cost in this area more due to the pass-through of inflation than due to the lack of manpower.

But what draws the most attention at the moment, however, is the Investment Intention Index of this industry – since June 2021, at levels below 50 points, according to data from the National Confederation of Industry (CNI). This signals that the constant hikes in the basic interest rate, the Selic, may indeed start to affect the mood of this market.

The Investment Intention Index has not been above 50 points for a long time. In June 2021, it was at 41.6 points; in May of this year, it went to 44.8; and in June 2022 it dropped again to 42.3. And this seems to be related to the question of interest. Because when we think of investment, we think of interest rates.

What draws the most attention at the moment is the Investment Intention Index of this industry – since June 2021, at levels below 50 points, according to data from the National Confederation of Industry (CNI).

Last year, public and private banks grew in the granting of real estate credit, with Caixa Econômica Federal in the lead. This has even announced adjustments in funding. In March of this year, however, according to Abecip, real estate credit with savings resources fell by 19.7%, due to the increase in interest rates and the fall in the average income of families. In the first quarter, the drop was 4.7%.

In May, there was an increase of 49.2%. But compared to the same month in 2021, we had a drop of 2.5%. In the first five months of 2022, 293,060 properties were financed with funds from SBPE savings, a result 11.7% lower than in the same period in 2021.

A study on emerging risks for society and business by the Swiss Re Institute also pointed out that inflation and the scarcity of raw materials can encourage the use of low quality material in real estate and the hiring of less qualified labor, impacting the insurance value.

This whole scenario, although it has positive consequences, also brings the alert for those who want to buy real estate now. Even with incentives for the purchase of housing, such as the recent MP that seeks to reduce bureaucracy in the purchase of real estate, the risks exist and require attention.

Tânia Gofredo he holds a bachelor’s degree in Economic Sciences with a postgraduate degree in Financial Administration (Faculdades Integradas Santana); He has an MBA in Business Economics (FEA-USP) and a Masters in Business Administration, Resources and Business Development (Mackenzie).
He is responsible for the economic analysis area of ​​the Costdrivers Platform.

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