Construction sector continues expansion
- CNL Reporter
- February 3, 2025
- Constructions
- Construction sector continues expansion
- 0 Comments
Construction sector continued to expand their activities through December 2024, extending their months-long expansion as reflected by the sector Purchasing Managers’ Index (PMI) for the month.
However, it appears that there is a pressing need for some large-scale construction projects for a meaningful recovery in the sector, including employment creation. The sector PMI, the monthly gauge of construction sector health, recorded an index value of 51.4 for December 2024, unchanged from the same index value in November. Under PMI, an index value above 50.0 indicates an expansion as an activity is split between an expansion and a contraction at 50.0 level.
If a certain activity is at 50.0 level, then it shows that such activity has neither expanded nor contracted. Despite the construction sector showing a broad expansion, the employment sub-index remains contracted. This may perhaps be due to the absence of more large-scale construction projects which the survey respondents said were needed to sustain industry growth. The public investments in large-scale infrastructure projects came to a standstill from 2022 when the economy ran out of both foreign currency as well as local funding to continue or kick start new infrastructure projects. Some of the funding earmarked for capital expenditure were re-purposed to provide assistance to large swaths of the public who fell victim to the runaway inflation and also those who lost incomes due to the economic crisis. But since around mid-last year, there were signs of multilateral and bilateral funding resuming, particularly after the conclusion of official debt restructuring last year for the projects which were either suspended or for new ones. Further, all eyes are now on the upcoming budget for 2025, for any new funds allocated for the public expenditure which for the last three years have been scant. Despite the broader recovery in constriction activities, some pockets such as housing appear to be lagging. However, with the lower interest rates translating into more housing loans this year, it is expected that the sector would see higher prospects for expansion which would enable the firm to hire new people to work in projects.
