Interest rate turnaround weighs on European construction industry, Austria faces significant slump

The year 2023 was expected to be a difficult one for the Austrian construction industry, with the business situation continuing to deteriorate. The sentiment indicators in the WIFO business survey turned pessimistic at the beginning of the year and by mid-2023 at the latest had reached levels last seen in the economically weak years of 2014 and 2015. The production figures reported by Statistics Austria also continued to lose momentum over the course of the year and now only show low single-digit growth rates. Although the high increases in construction costs and the associated construction prices have meant that production values and sales will initially continue to rise in 2023, they mask the fact that price-adjusted declines have already been recorded in many cases. For the first two quarters of 2023, Statistics Austria has so far reported declines in real construction investment growth of -3.6% and -7.1% year-on-year, respectively.