Both the OECD and IMF (January 2025) project global growth at 3.3% for 2025 and 2026, which although somewhat muted in historical terms, remains positive alongside the continuing decline of inflation levels. The IMF makes a point of noting that policy-generated disruptions to continued disinflation could yet affect any easing of monetary policy.
RLB considers 10 sectors to be representative of the construction industry as a whole. Each sector is assessed as to which of three activity level zones – Peak, Mid or Trough – best represents the current status of the sector within the cycle. This assessment is then refined by identifying whether the current status is in a Growth or Decline phase.
While there has been an increase in the proportion of regions and sectors in the Trough part of the cycle, by volume more are in Mid or Peak stages as shown across the sectors opposite.
The Infrastructure and Industrial sectors stand out as having most regions reporting Peak zone of activity, with Retail and Offices showing most in the Trough zone.
Looking at trends over the last 12 months at a sector level, Retail and Offices have both seen showing signs of recovery with a significant move from Trough Decline to Trough Growth. Infrastructure and Industrial show a prolonged period at the top of the cycle.
Data Centres and Health are also showing a high proportion of regions reporting growth, but with both having most of that growth in the Mid zone. While both sectors have different drivers, we expect them to continue to move to the Peak zone in the coming 12 months.
Using an arithmetic average, the downward revision overall for 2024 is around 0.8%. However, the standout region is Australia, where 2024 figures for most locations have been revised upwards, though again only slightly.
Going forward, the forecast figures being shown for 2025 and beyond, in this edition of the RLB Global Annual Report, show relatively little change from last time around. This suggests a steadying or at least embedding of underlying understanding of tendering risk in the face of various influences – see ‘Influences on construction escalation’.
These are costed globally, and within regions, using the same quantities and similar specifications. They are costed in local currencies and relativities are calculated using a combination of statistical methods, including:
The resultant index highlights the relative levels of construction costs between key global cities at Q4 2024.
Each region rates each influence. Scores are consolidated to provide insights on escalation influences impacting the global construction industry. Each influence’s proportion is illustrated in our infographic.
This year’s data still shows input costs driving much of the escalation in the industry. However, what is markedly different to last year is the growth in geopolitical risk. This is due to conflict and political instability at regional or country level. The latter is unsurprising following a year where over half of the global population went to the polls in a general election and many returned a change in government or a significantly smaller majority for the incumbent administration.
Looking at input costs, the most significant easing of pressure has been on material costs, with wage cost increases having a greater influence, and labour availability remaining a significant factor as skills shortages are yet to be addressed.
