Moody's Investors Service said in a new report released on Wednesday that healthy revenue growth and book-to-bill ratios point to supportive business conditions for the global construction sector, supporting its stable outlook for the industry over the next 12 to 18 months.
Moody's expects slowing but still healthy revenue growth of 4 per cent on average for rated construction companies, underpinned by healthy construction demand. Although this growth is much lower than the average 9 per cent revenue growth recorded in 2018, it is reflective of the global slowdown in GDP growth and remains supported primarily by infrastructure spending.
"Revenue growth will be the strongest in China, averaging 6 per cent for rated construction companies over the coming 12 to 18 months, although down from 10 per cent in 2018. Growth will be driven by an increase in infrastructure spending which is partially offset by weakness in the property and industrial sectors," said the report.
Elsewhere in Asia Pacific, revenue growth for Australian companies will slow to 3 per cent and remain supported by government spending on infrastructure, particularly transportation and telecommunications projects.
Spending on mining and natural resources will also increase but the residential sector will remain weak due to tightened credit conditions and the completion of a large supply of residential projects that begun two years ago.
Projected revenue growth is 4 per cent for US companies and is the lowest for European companies at 1 per cent. The rated US companies benefit from strong spending in certain energy end-markets, while conditions vary by country in Europe and are weakest in Britain amid Brexit uncertainty.
Moody's outlook covers 30 rated construction companies across nine countries with seven operating primarily in Europe, Middle East and Africa (EMEA), eight in the United States, 13 in Asia (almost all in China) and two in Australia.
.
Disclaimer: No Business Standard Journalist was involved in creation of this content
