The Construction Confidence Index (ICST), calculated by Fundação Getulio Vargas, rose 0.9 points in September, edging from 79.4 to 80.3 points. Expressed in quarterly moving averages, the index rose 0.3 points.

“Expectations improved, but did not recover to pre-truck drivers’ strike levels. There was a downward adjustment in perception related to the scenario in the short term that affected the sector as a whole. However, infrastructure companies, which are more susceptible to the currently uncertain environment, were more affected and still show no signs of improvement in confidence”, said Ana Maria Castelo, Construction Project Coordinator at FGV’s Brazilian Institute of Economics (IBRE)

In September, the increase in the ICST was influenced by both the improvement in the current situation and in the expectations for the coming months. The Current Situation Index (ISA-CST) rose 0.7 point, reaching 72.4 points, the highest level since June 2015 (74.2 points). The indicator that had the most positive effect on the increase was the one that measures the perception of the contract portfolio’s current situation, which rose 1.0 point, going from 69.8 to 70.8 points, the highest level since July 2015 (71.2 points).

The Expectations Index (IE-CST) rose 1.2 points in September, reaching 88.7 points, but still not enough to recover the losses suffered in the last month. The positive outcome stems from a more optimistic outlook for demand in the next three months, whose indicator rose 2.3 points between August and September.

The sector’s Capacity Utilization Level (NUCI) rose 1.4 percentage points up to 66.4%, reaching the highest level since February 2016 (67.0%). Both the NUCI for Manpower and for Machinery and Equipment varied positively, 1.4 and 1.2 percentage points, respectively.

In September, the ISA-CST recorded the fourth consecutive increase, reinforcing its recovery trajectory of recent months. However, the index has just returned to 2015 levels and is still far from the pre-crisis period (3Q13). The chart below shows that the ISA-CST for September is 25.4 points lower than in the pre-crisis period, which means a very challenging scenario in the short term. The difference from the pre-crisis period is also great between the three major construction subsectors: Specialized Services (-33.7 points), Buildings (-25.1 points) and Infrastructure Works (-23.1 points). “The activity has been recovering very slowly, which feeds business uncertainties”, said Castelo.

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