Real estate and construction sector director confidence drops in June

Director confidence in the real estate and construction sectors took a bit of a drop in June since May’s journey into optimistic territory. 

The Institute of Directors (IoD) Property and Built Environment Directors’ Economic Confidence Index fell to -3.4 in June from +8.7 in May (see chart).

“While it is disappointing to see the index fall after last month’s optimistic rise, it may be a reflection of some uncertainty in director decision-making before the recent general election. The overall trend in the last six months is still positive, however there are signs in our wider data collection indicating potential softening of investment and hiring intentions, which may be cause for some concern if they continue,” said Richard Nelson, Chair of the IoD Property and Built Environment Group, and Founder & Managing Director of Abyss Global Ltd.

The overall IoD Directors’ Economic Confidence Index survey dropped back to -14 in June from -3 in May, and revealed drops in business leaders’ investment, headcount, wage growth and revenue expectations, although export expectations remained steady. Leaders’ confidence in the 12-month prospects for their own organisations also showed a decline. 

“There are a few areas in which the new government can help the property and built environment sector,” Nelson continued. “We are pleased to read in their manifesto the focus on housing, planning and infrastructure, however quick and decisive actions will be needed in these areas if they are to gain trust and make an impact. Also, attention to financial incentives and increasing skills for the green economy are essential as we focus on driving down our carbon footprint to meet our statutory targets and public expectations.” 

The IoD Directors’ Economic Confidence Index (DECI) measures the net positive answers from members of the Institute of Directors to the question ‘How optimistic are you about the wider UK economy over the next 12 months?’ on a five-point scale from ‘very optimistic’ to ‘very pessimistic’. The IoD Property and Built Environment Directors’ Economic Confidence Index is a subset of the overall IoD DECI data which measures the responses of directors working in the real estate and construction sectors.