Nordic construction and civil engineering market



Late cycle growth and weaker inflation

The global business cycle was characterized in 2018 by several late cycle driving forces like a strong labor market, rising investments, high capacity utilization and recruitment difficulty. Growing concern for a recession combined with unforeseeable political gambits from the US and uncertainty about the effects of a trade war between the US and China contributed to the decline in global financial markets at the end of 2018, which meant the year began and ended with weak economic cycle data. Despite all this the global economy on the whole grew on par with 2017. Both the Eurozone and China slowed while growth in the US accelerated. The global economy is expected to slow in 2019 and level out in 2020. The slowdown is expected to be widespread and affect China and the US as well as Europe. Despite a strong labor market and the belief unemployment will continue to contract, salaries are rising at historically low rates. This, together with an increasingly global market in goods and services, digitalization and aging populations, is expected to keep the underlying inflation pressure at bay. It should also mean that interest rates remain low.

The economy in the Nordic countries


Sweden’s growth rate accelerated another notch in 2018. However, private consumption growth abated as did total investment volumes, primarily due to a decline in housing construction. While capacity is still at a shortage and recruitment difficulty continues, in both industry and the service sector it is becoming clear that we are now descending from the peak of the economic cycle. Although there is only a modest decline in growth, uncertainty factors and financial imbalances can have a dramatic effect during a slowdown. Examples of these factors are the ongoing trade wars, concern that the US economy will put on the brakes and Brexit. However, weak inflation signals indicate that interest rates will continue to be very low in both 2019 and 2020. Expansive fiscal policies and a weak Swedish krona can counteract a severe decline in the Swedish economy.


The Norwegian economy grew in 2018. Household finances were favored both by higher employment and rising real incomes, and the growing interest in the oil industry to invest sent positive impulses to the rest of the business world. Unemployment dropped and is expected to continue to contract over the next two years, which is good for private consumption. GNP growth in 2019 and 2020 is expected to remain above the normal trend. Private consumption and gross investments will probably drive this financial growth. At the same time stricter monetary policies and the resulting rising interest rates could very well have a dampening effect. A stronger Norwegian krone could also work negatively for the country’s export industry.


After good growth in recent years a slowdown in the Finnish economy is now anticipated. However, the forecast predicts growth in 2019 and 2020 will remain above the normal trend. The Finnish economy has been bolstered by strong domestic and international demand but when the global economy slows domestic consumption and investments will have to become the driving forces. It looks like unemployment will continue to drop and it is possible salaries will rise slightly as well. Capacity utilization is high in industry which normally entails more investments. Other business is sending similarly positive signals. Public finances have improved during the past few years thanks to both savings and a stronger economy and this can lead to more public consumption in the future.

Uncertainty in the Swedish housing market

Total building construction dropped from a high level in 2018. The decline was widespread and affected housing as well as other building construction. Zoning plans and construction permits indicate total building construction will continue to decrease in 2019. There is an uncertainty in the housing market on the heels of falling prices, big production volumes and high entry requirements for first time homebuyers. Sweden’s economy is slowing which reduces businesses’ motivation to invest in construction. Low interest rates, housing shortages and a growing population are some conditions for new construction of apartments for rent. In addition, there is still a significant need for renovations in properties built in the 60s and 70s. Population growth also generates greater needs in education, health and social care. Civil engineering construction rose in 2018 and it looks like this trend will continue in 2019. Both public and private investments are expected to contribute positively.

Fragmented construction market in Norway

The volumes in building construction investments in 2018 remained unchanged from 2017. However, behind the numbers the market is fragmented. While construction of premises for the public sector and industry developed positively housing construction declined. Investments in private premises on the other hand developed sideways. It is not unreasonable to believe that building construction volumes will increase somewhat in 2019 based on the fact that economic prospects seem bright. High demand and advantageous financing terms have continued to favor civil engineering construction during the past year. The positive trend is expected to continue in 2019 and then level out around 2020.

Construction market went sideways in Finland

Total housing construction continued to grow in 2018. New production of apartment buildings increased while single home construction declined. The downturn in other building construction continued in 2018 and affected industrial, office and commercial premises. The downturn was primarily due to declining new construction investments. Renovation investments on the other hand showed strong growth. The forecast for total building construction volumes points to a marginal upturn during 2019. The forecast for civil engineering construction indicates a slight increase in both 2018 and 2019. Public finances have improved which can boost civil engineering construction.

Green and social sustainability

The environment and sustainability are concepts that permeate every section of business and influence mindsets, customer demands and strategies in the construction and real estate markets. Lately the climate debate has intensified even further. We must make an effort to limit global warming. A rise in temperature of even two degrees can have substantial negative effects. We face huge challenges and will need both new technology and make changes in our consumption and in the way we use the earth’s resources. The construction and real estate industries will indirectly be affected by new patterns of living but of course they too have a key role to play in contributing to a more sustainable society. The construction industry can have a direct effect by constructing buildings and facilities that in part can handle climate changes and in part contribute positively to climate conversion. Examples of this are building complexes that not only manage their own lifecycle but by generating renewable energy and through green areas and urban gardening help the environment and biological diversity. Sustainability also means creating a community where we avoid building barriers and instead break down exclusion and work towards greater integration and far-reaching social sustainability.

Other major players

Although the Nordic construction market consists mainly of a large number of small companies operating under intense competition and on local markets there are a few very large, national players. Several of them also operate more or less on the entire Nordic market. Some that can be named in building construction exept for Peab are Skanska, NCC, JM, Veidekke, AF Gruppen and YIT.

Some of the players in civil engineering and road construction besides Peab are Skanska, Veidekke, AF Gruppen, Danish Per Aarsleff, NCC, Svevia and Infranord.

Source for text and graphics: Industrifakta


Housing investments
Initiated construction projects
Other building construction investments
Initiated construction projects
Civil engineering investments
Ongoing investments