Engineering growth: Q2 2012
Our analysis reveals that the high level of uncertainty stemming from the European sovereign crisis, the slowdown in China’s growth, and the sluggish US economy took a toll on E&C deal activity during the second quarter. Additionally, substantial reduction of federal and state government spending, both in the United States and across the globe, created an impediment to the attractiveness of the E&C sector.
Here are a few highlights:
- The high level of uncertainty stemming from the European sovereign crisis, the slowdown in China’s growth, and the sluggish US economy took a toll on E&C deal activity during the second quarter 2012. The total number and value of deals in the global engineering and construction industry fell to 2009 recessionary low levels, a decrease that affected a wide range of deals.
- The deal activity growth that occurred in the construction subsector was driven by the increasing infrastructure and urbanization needs of emerging markets.
- The single most active country was the United States; its activity was largely driven by financial investors. Asia and Oceania generated the largest number of transactions.
- There was only one mega-deal in the second quarter and deterioration in large and mid-market deals. Small and undisclosed deals also remain subpar, reinforcing investors’ intention to sit on the sidelines, while we await more clarity on the direction of the global economy.