The results from the November issue of the Construction Industry Survey showed a slight decline in production-related indicators, but a significant improvement in future trend indices, suggesting that the sector continues to rebound.

The November-January period is usually marked by low activity in the sector, so a slowdown is expected, which reflects in the production-related indicators. The activity and employment indices decreased while spare capacity remained stagnant in November.

The indices measuring future trends in investment intentions, expectations and confidence have improved significantly. Special mention should be made of the increase in investment intentions, possibly reflecting the more favorable market conditions, which contribute to investment predictability.

Entrepreneurs’ confidence increased, driven mainly by current company conditions. Entrepreneurs are optimistic about the sector’s direction.

Investment intentions suggest favorable outlook for the sector

CONSTRUCTION INDUSTRY SURVEY

Investment intentions indexDiffusion index (0-100 points)*

*The index ranges from 0 to 100. The higher the index, the higher the willingness to invest.

25

30

35

40

45

DEC

2016

JUN

2017

DEC JUN

2018

DEC JUN

2019

DEC

Historical average = 33.9

31.1

33.8

30.6

35.2

32.5

38.0

32.8

42.2Dec/19

33.1

36.6 37.2

36.2

37.9

26.6

INDICATORSECONOMICISSN 2317-7322 • Year 10 Number 11 • November 2019

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Construction industry surveyISSN 2317-7322 • Year 10 Number 11 • November 2019

INDICATORSECONOMIC

The indices measuring month-over-month activity levels and number of employees decreased in November, a period when seasonability is unfavorable for the sector.

The activity indicator amounted to 49 points, down by 0.9 points as comparted to October. Despite the decline, the indicator is still 3.4 points above the reading for November 2018 and 3.3 points above its historical average.

Activity and employment fallPERFORMANCE OF CONSTRUCTION INDUSTRY IN NOVEMBER 2019

The index of number of employees fell by 1.1 points from October to 47.4 points in November. However, the indicator is 4.2 points higher than the figure observed in November 2018 and 3.5 points higher than its historical average.

Both indicators are below the 50-point dividing line, indicating that activity and employment levels have worsened on a month-over-month basis. Yet, they remain above their respective historical averages (45.7 points for activity levels and 43.9 points for employment levels).

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

50Increase

Decrease

JAN

2019

NOV

2018

DEC FEB MAR APR MAY JUN JUL AUG SEP OCT NOV

45.6

43.2

44.0

42.5

49.9

48.549.0

47.4

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

Activity levels Number of employees Dividing line

3

Construction industry surveyISSN 2317-7322 • Year 10 Number 11 • November 2019

INDICATORSECONOMIC

Operating capacity utilization holds steadyIn November, the operating capacity utilization rate remained stagnant for the third consecutive month at 62%, equivalent to its historical average. Small companies were the only business size group to experience an increase in idle capacity

Operating capacity utilization(%)

in November, with operating capacity utilization falling by 1 percentage point from October to 57%. The group of medium companies remained stable as the indicator stood at 61%. The indicator for large companies in turn increased by 1 percentage point, reaching 65% in November.

Entrepreneurs are more willing to investThe index measuring investment intentions (purchases of machinery and equipment, research and development, and product or process innovation) hit the mark of 42.2 points in December, representing its highest point since November 2014.

On a month-over-month basis, the indicator increased by 4.3 points, while on a year-over-year

basis it rose by 7.4 points. The index is also up by 8.3 points from its historical average.

The investment intentions index shows that Brazilian entrepreneurs are more willing to invest, reflecting the more favorable market conditions for doing business, such as inflation and low interest rates.

50

55

60

65

70

NOV

2014

MAY

2015

JUL NOV MAY

2016

JUL NOV MAY

2017

JUL NOV MAY

2018

JUL NOV MAY

2019

JUL NOV

56

5957

Historical average: 62%

66

56

62%Nov/19

4

Construction industry surveyISSN 2317-7322 • Year 10 Number 11 • November 2019

INDICATORSECONOMIC

INDUSTRY’S EXPECTATIONS IN DECEMBER 2019

Expectation indicators continue to show business optimism about the sector’s growth over the next six months.

The indicator measuring expected activity levels reached 57.3 points, up by 2.4 points as compared to November and by 1.8 points from December 2018. The indicator of expected new developments and services rose by 2.7 points between November and December to 56.6 points, and is 1.4 points above the figure registered a year ago.

Entrepreneurs expect growth in coming monthsExpectations about purchases of inputs and raw materials also improved, with the index growing by 2.5 points month-on-month and by 3.9 points year-on-year, hitting the mark of 56.7 points. Finally, the index of expected number of employees increased by 2.1 points month-over-month and by 3.3 points year-over-year, reaching 56 points in November.

The indices showed a very similar behavior as in January this year, when the new government took office.

50

Increase

Decrease

58.1

53.9

53.0

55.2

54.9

56.6

DEC

2018

FEB

2019

APR JUN AUG OCT DEC

50

Increase

Decrease

56.5

54.2

52.652.8

55.1

56.7

DEC

2018

FEB

2019

APR JUN AUG OCT DEC

50

Increase

Decrease

54.6

56.1

53.952.7 52.6

56.0

DEC

2018

FEB

2019

APR JUN AUG OCT DEC

DEC

2018

FEB

2019

APR JUN AUG OCT DEC

50

Increase

Decrease

58.4

54.954.555.5

56.457.3

Expectations indicesDiffusion indexes (0-100 points)*

Activity levels New developments and services

Purchases of inputs and raw materials Number of employees

Activity level Dividing line New developments and services Dividing line

Purchases of raw materials Dividing line Number of employees Dividing line

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

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Construction industry surveyISSN 2317-7322 • Year 10 Number 11 • November 2019

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CONSTRUCTION BUSINESS CONFIDENCE INDEX IN DECEMBER

Entrepreneurs showing optimism and increased confidences

The Construction Business Confidence Index (ICEI-Construction) reached 63.1 points in December, up by 1.1 points from the figure registered in November. This is the second highest reading since February 2011, lower only than the figure for January this year.

All components making up the ICEI recorded growth, but the current conditions index increased more than that of expectations, influenced by business conditions. The INEC is up by 9.4 points from its historical average and by 13.1 points from the 50-point dividing line, indicating that entrepreneurs are more confident about the sector’s direction.

53.7 (historical average)

63.1

Confidence

Lack ofconfidence

50

Historical average = 53.7

DEC

2013

DECJUN

2014

63.1Dec/19

DECJUN

2015

DECJUN

2016

DECJUN

2017

DECJUN

2018

DECJUN

2019

55.7

44.9

35.0

46.3

56.7

62.362.0

Thermometer for the ICEI-ConstructionIndex (0-100 points)*

lack of confidence confidence

Historical series Diffusion index (0-100 points)*

ICEI - Construction Dividing line

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

Construction industry surveyISSN 2317-7322 • Year 10 Number 11 • November 2019

INDICATORSECONOMIC

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

Nov/18 Oct/19 Nov/19 Nov/18 Oct/19 Nov/19 Nov/18 Oct/19 Nov/19 Nov/18 Oct/19 Nov/19

CONSTRUCTION 56.0 62.0 62.0 45.6 49.9 49.0 35.3 38.8 39.3 43.2 48.5 47.4

SMALL 50.0 58.0 57.0 43.9 47.3 47.7 36.7 39.9 40.8 44.7 46.4 45.5

MEDIUM 57.0 61.0 61.0 45.7 48.7 48.0 34.8 39.3 39.4 43.4 46.9 46.7

LARGE 58.0 64.0 65.0 46.1 51.6 50.0 35.0 38.2 38.7 42.5 50.2 48.5

Results by company size

Activity Level4 New Developments and Services4

Purchases of Inputs and Raw Materials4 Number of Employees4 Investment

intentions5

Dec/18 Nov/19 Dec/19 Dec/18 Nov/19 Dec/19 Dec/18 Nov/19 Dec/19 Dec/18 Nov/19 Dec/19 Dec/18 Nov/19 Dec/19

CONSTRUCTION 55.5 54.9 57.3 55.2 53.9 56.6 52.8 54.2 56.7 52.7 53.9 56.0 34.8 37.9 42.2

SMALL 55.4 58.1 56.3 53.8 57.1 54.5 52.6 55.9 53.8 51.4 54.7 52.7 35.4 37.5 36.9

MEDIUM 55.8 53.5 55.4 54.1 52.1 54.2 52.6 53.1 54.0 53.7 52.3 53.6 34.4 37.3 41.4

LARGE 55.4 54.6 58.8 56.3 53.7 58.7 53.0 54.2 59.3 52.6 54.6 58.6 34.9 38.4 44.6

ICEI - Construction6 Current conditions7 Expectations8

Dec/18 Nov/19 Dec/19 Dec/18 Nov/19 Dec/19 Dec/18 Nov/19 Dec/19

CONSTRUCTION 62.3 62.0 63.1 50.6 54.4 55.6 68.2 65.8 66.8

SMALL 60.8 61.7 60.9 50.5 54.6 53.3 65.9 65.3 64.7

MEDIUM 62.9 62.2 62.2 52.4 55.4 55.1 68.1 65.7 65.7

LARGE 62.6 62.0 64.4 49.6 53.7 56.7 69.1 66.0 68.2

Construction industry performance

Expectations for the construction industry

Construction business confidence index and its components

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.

Technical specificationsSample profile: 469 enterprises, including 166 small, 201 medium and 102 large companies. Data collection period: December, 2-11, 2019

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

CONSTRUCTION INDUSTRY SURVEY | English version of “Sondagem Indústria da Construção - Novembro 2019” | Monthly Publication of the National Confederation of Industry - CNI | www.cni.com.br | Industrial Development Board - DDI | Economic Policy Unit - PEC| Executive manager: Flávio Castelo Branco | Research and Competitiveness Unit - GPC | Executive manager: Renato da Fonseca | Statistics Unit | Manager: Edson Velloso | Analysys: Dea Guerra Fioravante | Team: Roxana Campos, Aretha Silícia Lopez Soares and Ieda Vasconcelos (CBIC) | Editing Unit | Coordinator: Carla Gadelha | Graphic design: Simone Marcia Broch | Customer Service - Phone: +55 (61) 3317-9992 – email: sac@cni.com.br | This publication may be copied, provided that the source is cited.