The construction industry slowed down in Janu-ary. The results from the construction survey show a decline in activity and employment levels and an increase in spare capacity. The sector is tradi-tionally marked by seasonality at the beginning of the year in the sense that activity and employment levels experience a decline. However, actual-usual activity levels increased by 2 points, suggesting that, despite the seasonality, activity was slightly higher than expected for the period.

The Construction-ICEI index held relatively stea-dy at 63.3 points, down by only 0.4 points from January. However, the indicator remains at a high level as it is significantly above the 50-point divi-ding line and up by 10.1 points from its historical average. The components making up the ICEI indicate a decline in the expectations indicators, which was offset by an increase in the indicators measuring current conditions.

Poor performance in the construction sector in January

Current Conditions Index, ICEI-Construction Index, and Expectation Index* Diffusion index (0-100 points)

*The indices vary in the 0-100 interval. Figures above 50 points indicate an expected growth

50

Increase

Decrease

FEB

2012

AUG FEB

2013

AUG FEB

2014

AUG FEB

2015

AUG FEB

2016

AUG FEB

2017

AUG FEB

2018

AUG FEB

2019

ICEI-Construction index Current conditions index Expectation index Dividing line

CONSTRUCTION INDUSTRY SURVEY

CNI indicatorsISSN 2317-7322 • Year 10 • Number 1 • January 2019

2

Construction industry surveyISSN 2317-7322 • Year 10 • Number 1 • January 2019

The indices measuring activity levels and number of employees showed a slight deterioration in January from the previous month. Activity levels and jobs decreased by 0.4 points and 0.3 points respectively, thus moving away from the 50-point dividing line.

The fact that the indices remained below the 50-point mark indicates that both activity levels and employee numbers in the construction industry continued on a month-by-month downward trend

Poor performance in January

January sees decline in operating capacity utilization

PERFORMANCE OF CONSTRUCTION INDUSTRY IN JANUARY 2019

in January. The activity index stood at 44 points, down by 1.6 point from January 2018. The index of number of employees in turn amounted to 42.5 points, representing a 1.4-point decline from the figure recorded in the same month a year ago.

The construction sector is traditionally marked by seasonality at the beginning of the year in the sense that activity and employment levels experience a decline.

The operating capacity utilization rate stood at 55% in January, down by 2 percentage points from December. Since January 2015, the indicator has stood at an average of 57%, 12 percentage points lower than the average for the period from January 2012 to December 2014, which is 69%. While operating capacity utilization among small companies remained unchanged, medium and large businesses experienced a decline of one and three percentage points respectively, contributing to the decline in the indicator.

On the other hand, the indicator measuring actual-usual activity levels posted month-on-month growth of 2 points in January, reaching 38.7 points. The indicator moved closer to the 50-point dividing line, showing that activity is closer to usual levels for the month. Small enterprises were the only ones to experience a decline in activity levels: -1.8 point on a month-over-month basis. Meanwhile, medium and large businesses recorded growth of 1.7 and 3.4 points respectively, on the same comparison basis.

Activity and employment index Diffusion index (0-100 points)*

*The index ranges from 0 to 100. Figures below 50 points indicate a decline in activity and employment.

50

Increase

Decrease

45.6

44.444.0

43.242.8

42.5

JAN

2018

MAR MAY JUL SEP NOV JAN

2019

FEB APR JUN AUG OCT DEC

Activity levels Number of employees Dividing line

3

Construction industry surveyISSN 2317-7322 • Year 10 • Number 1 • January 2019

INDUSTRY’S EXPECTATIONS IN FEBRUARY 2019

While all expectations indicators experienced a decline between January and February, they are above the 50-point mark and show an expected growth in the future. Since November last year, expectations have been pointing to a more optimistic view of the construction industry.

The indicators measuring activity levels and purchases of inputs and raw materials dropped by 1.8 point, amounting respectively to 56.6 and 54.7

Decline in expectations reverses optimistic trendpoints. The index measuring expected number of employees stood at 54.5 points, down by 1.6 point from January. Finally, the indicator of new developments and services was the one for which the highest decline was registered: down by 2.4 points to 55.7 points in February.

Despite the widespread decline in the indicators, they all remain above the figure recorded 12 months prior.

50

Increase

Decrease

FEB

2018

APR JUN AUG OCT DEC FEB

2019

55.5

58.4

56.6

55.4

50

55.2

58.1

55.7

53.8

Increase

Decrease

FEB

2018

APR JUN AUG OCT DEC FEB

2019

5052.8

56.5

54.754.5

Increase

Decrease

FEB

2018

APR JUN AUG OCT DEC FEB

2019

50

52.7

56.1

54.5

53.3

Increase

Decrease

FEB

2018

APR JUN AUG OCT DEC FEB

2019

Expectations indicesDiffusion indexes (0-100 points)*

Activity levels New developments and services

Activity level Dividing line New developments and services Dividing line

Purchases of raw materials Number of employees

*The indices vary in the 0-100 interval. Figures above 50 points indicate an expected growth.

Purchases of raw materials Dividing line Number of employees Dividing line

4

Construction industry surveyISSN 2317-7322 • Year 10 • Number 1 • January 2019

After posting two consecutive increases, the index measuring investment intentions (purchases of machinery and equipment, research and development, and product or process innovation) dropped by 2 points in February. Notwithstanding the decline, the indicator hit its highest point for the month in 5 years at 36 points – almost identical to the figure observed in February 2015, when the indicator reached 35.9 points.

Investment intentions fall but remain above historical average

The index ranges from 0 to 100 points and the higher the reading, the more entrepreneurs are willing to make investments.

The indicator is 3.9 points higher than the figure observed in February last year, but is down by 2.3 points from its 33.7-point historical average.

Investment intentions indexDiffusion index (0-100 points)*

*The index vary in the 0-100 interval. The lower the index, the lower the willingness to invest.

25.9

26.8

32.1 32.5

34.8

38.0

36.0

24

28

32

36

40

FEB

2016

AUG FEB

2017

AUG FEB

2018

AUG FEB

2019

5

Construction industry surveyISSN 2317-7322 • Year 10 • Number 1 • January 2019

CONSTRUCTION BUSINESS CONFIDENCE INDEX IN FEBRUARY

Confidence among construction entrepreneurs remain high

The Construction Business Confidence Index (ICEI-Construction) stood at 63.3 points in February, down by 0.4 points on a month-over-month basis. Despite the decline, confidence level among construction entrepreneurs is still up by 10.1 points from the historical average.

The ICEI Construction index is made up of the current conditions and expectations indicators. The current condition indicators compare the current situation to that of the previous six months, while the expectations indicators measure entrepreneurs’ sentiment about the next six months.

Thermometer for the ICEI-Construction Index (0-100 points)*

53.2 (historical average)

lack of confidence confidence

63.3

Historical series Diffusion index (0-100 points)*

*Figures above 50 points indicate business confidence. The further above 50 points, the more significant and widespread the confidence is.

ICEI - Construction Dividing line

Confidence

Lack of

confidence

50

Historical average = 53.2

39.836.4

50.9

56.3

63.7

63.3

FEB

2013

AUG FEB

2014

AUG FEB

2015

AUG FEB

2016

AUG FEB

2017

AUG FEB

2018

AUG FEB

2019

57.9

Among the ICEI Construction index components, the indicator of current conditions of the Brazilian economy posted the highest increase: up by 2.2 points. The indices measuring conditions of individual companies and current conditions rose by 1.2 and 1.4 points respectively. All expectations indicators, however, are down and the index measuring expectations about the Brazilian economy experienced the sharpest decline: -1.5 point. The results suggest that entrepreneurs have noticed an improvement in conditions as compared to the past, but expectations for the future fell in February as compared to January.

Construction industry surveyISSN 2317-7322 • Year 10 • Number 1 • January 2019

Operation CapacityUtilization (%)1 Activity Level2 Actual-Usual Activity Level3 Number of Employees2

Jan/18 Dec/18 Jan/19 Jan/18 Dec/18 Jan/19 Jan/18 Dec/18 Jan/19 Jan/18 Dec/18 Jan/19

CONSTRUCTION 60.0 57.0 55.0 45.6 44.4 44.0 35.2 36.7 38.7 43.9 42.8 42.5

SMALL 53.0 54.0 54.0 42.2 42.8 41.6 38.9 40.2 38.4 41.9 43.8 44.6

MEDIUM 58.0 56.0 55.0 44.9 44.0 43.8 35.2 35.8 37.5 43.8 42.5 42.3

LARGE 63.0 58.0 55.0 47.2 45.3 44.9 33.8 36.0 39.4 44.6 42.7 41.8

Activity Level4 New Developments and Services4

Purchases of Inputs and Raw Materials4 Number of Employees4 Investment

intentions5

Feb/18 Jan/19 Feb/19 Feb/18 Jan/19 Feb/19 Feb/18 Jan/19 Feb/19 Feb/18 Jan/19 Feb/19 Feb/18 Jan/19 Feb/19

CONSTRUCTION 55.4 58.4 56.6 53.8 58.1 55.7 54.5 56.5 54.7 53.3 56.1 54.5 32.1 38.0 36.0

SMALL 55.5 58.7 57.2 53.0 57.9 55.0 53.2 56.5 55.1 52.0 56.8 54.5 32.1 38.8 33.9

MEDIUM 55.6 57.3 54.9 55.2 56.7 53.5 54.6 55.6 53.2 53.5 55.1 52.3 30.2 36.1 35.9

LARGE 55.3 58.9 57.3 53.3 59.0 57.3 55.0 57.0 55.5 53.7 56.5 55.8 33.2 38.7 36.9

Learn moreTechnical specifications

i

ICEI - Construction6 Current conditions7 Expectations8

Feb/18 Jan/19 Feb/19 Feb/18 Jan/19 Feb/19 Feb/18 Jan/19 Feb/19

CONSTRUCTION 56.3 63.7 63.3 49.1 51.6 53.0 59.8 69.7 68.5

SMALL 55.4 62.0 61.7 47.6 50.7 53.4 59.5 67.6 66.0

MEDIUM 56.6 63.3 62.4 49.0 51.1 53.1 60.1 69.4 67.0

LARGE 56.4 64.5 64.4 49.8 52.3 52.7 59.7 70.7 70.3

Results by company size

Construction industry performance

Expectations for the construction industry

1 The indicator varies in the 0%-100% interval. Series started in January 2012.2 The indicator varies in the 0-100 interval. Figures above 50 points indicate growth.3 The indicator varies in the 0-100 interval. Figures above 50 points indicate higher-than-usual activity levels.4 The indicator varies in the 0-100 interval. Figures above 50 points indicate positive expectations.5 The indicator varies in the 0-100 interval. The higher the index, the greater the willingness to invest.6 The ICEI-Construction varies in the 0-100 interval. Figures above 50 points indicate business confidence.7 The indicator varies in the 0-100 interval. Figures above 50 points indicate a better situation as compared to the last six months. 8 The indicator varies in the 0-100 interval. Figures above 50 points indicate optimistic expectations for the next six months.

For more information on the survey, including sectoral results, previous editions, methodology and historical series, visit: www.cni.com.br/e_sondconstr

Sample profile: 469 enterprises, including 157 small, 212 medium and 100 large companies. Data collection period: February, 1-13, 2019.

CONSTRUCTION INDUSTRY SURVEY | English version of “Sondagem Indústria da Construção - Janeiro 2019” | Monthly Publication of the National Confederation of Industry - CNI | www.cni.com.br | Policy and Strategy Unit - DIRPE | Economic Policy Unit - PEC| Executive manager: Flávio Castelo Branco | Research and Competitiveness Unit - GPC | Executive manager: Renato da Fonseca | Statistics Unit | Manager: Edson Velloso | Team: Dea Guerra Fioravante, Luis Fernando Melo Mendes (CBIC) and Roxana Campos | Editing Unit | Coordinator: Carla Gadelha | Graphic design: Carla Gadelha | Customer Service - Phone: +55 (61) 3317-9992 – email: sac@cni.com.br | This publication may be copied, provided that the source is mentioned.

Construction business confidence index and its components