Blog Post

The Market is Taking Off in 2015

The latest statistics that the National Institute of Statistics has published make it clear that the recuperation of housing activity has picked up speed in 2015.  In the first three months of the year, investment in assets has seen the greatest increase since 2006, while the wealth generated by the sector has seen its best quarter in 14 years.  In terms of employment, we also have good news: we have not seen growth like this since the end of the last century.

According to the facts included in the National Quarterly Account that the statistics institute completes,  the construction sector has also marked, in the first quarter of the year, the best figures since at least 2006.  In the case of employment changes, we would have to go back to the end of at least the year 2000 to find any improvements so obvious.

Even so, we cannot forget that the sector has been tremendously punished during the years of the crisis, but we shouldn’t ignore that the latest official stats point to construction making a comeback.


Like these four graphics show:


1.  Investment has had its best quarter in eight years


Investment in construction assets (like buildings or machinery) has grown between January and March by 4.9% from last year, which means that it has doubled its pace for improvement that showed up at the end of last year.  And, according to the National Institute of Statistics, between October and December of 2014, the surge was 2.4%.


The most surprising fact is that this 4.9% is the highest year-to-year spike that this indicator has recorded since the fourth quarter of 2006 (when it rose 5.5%), all thanks to the fact that all components have seen improvement: “investments in housing as well as civil engineering (highways, railways…) and other construction,” the organization says verbatim.


Just as we can see in the graphic, in the spring of 2009, investment plummeted by more than 18%, and it was in the third quarter of last year (July-September) when it started to take off.


2.  Employment in the building sector is rising to levels not seen since last century


The stats, in terms of employment in the building sector, are in tune with those that the Ministry of Employment and Social Security provide.


National Accounting, in the first three months of the year, cited a 9.7% increase from the previous year in the number of full-time employees in this sector in Spain, which includes those self-employed or employed by others.  Therefore, it shows an improvement that triples the average of all sectors (around 2.8%) and it is recording its most stand-out progress since the end of the year 2000 (when it rose 12.4%).


Now, we can’t forget that currently there are 992,000 employees in the sector, when, in 2007, before the bubble burst, more than 2.6 million employees were accounted for.


3.  The wealth being generated in the sector is growing at the same pace as 2001


Another of the most peculiar facts that the organization has published is that which refers to the evolution of the added value that the sector contributes, which is calculated by deducting what the sector consumes (for example, the cost of raw materials) from production.  That is, whatever produces less has to pay.


And how is this index doing now?  The answer is that between January and March it has increased by 5.8% regarding the same time from the year before.  We would have to go back 14 years to see a similar rebound to that achieved in the first quarter: between January and March of 2001 we also saw a year-to-year increase of 5.8%.


“Consistent with the evolution of the demand for building assets and for employment in this sector, the brute added value of the sector improved its growth 2.4 points, after passing the 3.4% from the end of 2014 with the current 5.8%,” explains the statistical institute.


Despite the fact that the improvement is tangible, we should remember that this ratio is starting from some very low levels.  To verify it we need to remember that, throughout the century, the two most critical moments of the added value were the first months of 2010 and 2012: we saw a year-to-year drop that went beyond 15%.


4.  The activity that grew the most in the last six months


National Accounts estimates that the industry has been the sector that has had the most positive behavior in the start of the year.  Its growth of 1.8% since March is the best figure that has been recorded since the crisis broke out, while in the case of construction the rhythm of growth has slowed down regarding the three previous months: it grew 1.4% compared to the previous 3.1%.


Despite the reduced growth in activity, construction has advanced more quickly than the rest of the economy (which recorded a surge of 0.9%) and has turned into the most stand-out activity in the last six months.  Spain is leading Europe regarding the recuperation of the sector.



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