The Construction Confidence Index (ICST), calculated by FGV’s Brazilian Institute of Economics (IBRE), dropped 1.2 points in February, falling from 82.6 points in January to 81.4 points. The index maintained the upward trend in quarterly moving averages.

“After rising for eight consecutive months, optimism among executives seems to have cooled down. There was a shift in short-term expectations, but the business community altogether remains confident in the current business situation. Despite the drop in confidence, this result shouldn’t be seen as a definitive shift in the mood of executives, but rather as a sign that the path that lies ahead will not be easy”, said Itaiguara Bezerra, Coordinator of IBRE’s Construction Survey.

The ICST’s drop in February is attributed to weaker optimism towards short-term prospects among executives: the Expectations Index (IE-CST) fell 3.2 points, down to 92.7 points, returning last month’s increase. The main indicator behind this month’s subpar results is the one that gauges the optimism of executives regarding the business situation for the next six months, which fell 3.3 points in the margin, down to a total of 94.9 points.

Although expectations have settled, the satisfaction of executives with the current situation remains relatively stable. The Current Situation Index (ISA-CST) rose 0.6 point, up from 69.9 in January to 70.5 points – the highest level since July 2015 (71.7 points). Both components of this sub-index virtually showed the same variation: the indicator that measures the level of satisfaction with the current business situation rose 0.6 point, up to 73.7 points, while the indicator that measures perception surrounding the contract portfolio grew 0.7 point, up to 67.5 points. 

The improvement in the ISA-CST was driven by the Infrastructure and Specialized Services segment: 0.8 and 1.9 points, respectively. The Buildings segment dropped 0.1 point. “Even with the slight improvement in the current situation, the outlook is still very hazy, especially in the political scenario, which affects the investment decisions of both the Government and the productive sector”, said Itaiguara Bezerra.

The sector’s Capacity Utilization Level (NUCI) dropped 0.7 percentage point (p.p.), down to 65.5%. The NUCIs for Manpower and Machinery and Equipment saw decreases in the same magnitude. 

The February 2018 edition collected data from 679 companies between February 1 and 22. The next Construction Survey results will be published on March 26, 2018. Go to the website to read the complete study.