Eurozone construction woes continue as new business sales plummet

The HCOB Eurozone construction purchasing managers' index pointed to a further marked deterioration at the end of the third quarter, with new business sales dropping to their lowest level in over three years.

The headline construction PMI, which measures overall activity across the single-currency region's construction sector, rose slightly to 43.6 in September from 43.4 in August.

However, the gauge remained well below the key 50-point level which separates growth from contraction – marking the 17th consecutive month in negative territory.

Across the region, Germany registered the sharpest drop in activity, with the pace of decline accelerating to its worst level since April 2020.

Notably, inflows of new business at construction firms across the Eurozone dropped sharply, with the rate of contraction accelerating to its most pronounced since May 2020, leading to further falls in activity and input buying.

"The Eurozone’s building business is still caught in a bind," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, who added that signs of improvement are "nowhere on the radar".

"The economy's most rate-sensitive chunk is still stuck in a downward trend that kicked off in spring of last year. Even though the European Central Bank has signalled that the interest rates hiking cycle is about to come to an end, business expectations remain in a tailspin."