Evaluation of the sector of the construction by the Marketmonitor study

Spanish GDP contraction is mainly due to the fall of domestic demand, which has been declining since the third quarter of 2008 to fall by 5.4% in the first quarter of 2009. The biggest drop hit private consumption (4.1%) and gross investments in property, plant and capital (13.1%). In the latter case, the sector of construction (- 12.4) and property investment (- 18.6%) recorded the most significant fall.

Public spending was increased by 5.4% in the first quarter of 2009, while the increase was smaller than in previous quarters. Both exports and imports have been reduced, a 22.3% and 19% respectively. While imports recorded a drop more than exports, external demand provided a positive contribution to GDP of 2.3 points in the first quarter of 2009.

During the first three months of 2009 were detected signs that the upward trend in the delay in payments of companies, caused by the global economic downturn, was reducing. For the first time since September 2007, when the indicator of credit and suretyship defaults began to reflect a change in trend, increasing delays in payments has been leveled. This reflected the adaptation of the Spanish companies to adverse environments and how are implementing tighter credit management controls.

For the moment, not we anticipate a recovery of the market by 2010, so companies must apply more stringent criteria when selecting risks and manage collections.

Since the third quarter of 2007 the investment in the construction industry have been affected negatively by the deterioration of the real estate sector and the financial problems on a global scale. During 2008, production fell 16.3% due to a lower activity in the subsector of the building. Up to now, the civil engineering and investment in infrastructure projects have acted as a stabilizing factor. In 2008, total investments in this area reached the significant figure of 38.265 million euros, and will remain stable during 2009.

In the first five months of 2009 bankruptcies in the construction sector increased a 13% year on year. Foreclosures continue to rise, but there is evidence to show that the pace has slowed slightly.

Providers should assess not only the solvency of their clients, but also its ability to payment in relation to the generation of liquidity during the cycle of exploitation. This generation of liquidity depends on the type of construction activity to develop the company. For example, in civil engineering and public works the practice of payment is usually better than in the private sector, and that customers are government bodies. However, there are to take into account that even government agencies are often delayed in their payments.

The current economic figures do not show signs of recovery in the housing subsector. At the end of the first quarter of 2009 inspections of flats had fallen by 56.5%, consumption of cement in the sector a 17.9% and unemployment had risen 9.3%. But local governments and the central Government introduced measures aimed at increasing the public works, especially in the subsectors of civil engineering, maintenance and renewal, and to counter the downturn in the construction sector and the overall economywith special emphasis on investment in infrastructure.

These measures are contained in the Strategic Plan for infrastructure and transport (PEIT), which extends to 2020 and covering, in total, some investment planned 248.892 million euros. In addition, the so-called E Plan has launched to encourage activity in the sector of public works, with an investment of EUR 8 billion Fund. Some projects have already been approved and have been put in place.

Monthly credit and suretyship, offers a snapshot updated to the minute on a number of key business sectors and export markets. At the moment, the analysts of credit and suretyship have access without restriction to all credit information and risk of 52 million companies, which improves the speed of decisions, quality and monitoring. Is it not only of financial statements, but information enriched with real time data provided to the system by members about the behavior in payments from its clients. All of this information feeds a system that monitors the evolution of the risks of failure to pay the insurance company perceives in each company. Our analysts have a specialized knowledge in global economy, as well as the industries that drive the economy. Their perspective on a number of key markets is available in each edition of the Market Monitor.