Eurozone construction registers steepest annual drop in nearly three years

Construction output in the eurozone fell again in November, registering its biggest annual drop in nearly three years, according to data released on Thursday by Eurostat.

Seasonally adjusted production in the construction sector decreased by 1.0% during the month of November, with the downturn accelerating from a revised 0.6% in October.

Compared with the same month in 2022, output was down 2.2%, as building construction decreased by 2.4% and civil engineering fell by 1.0%.

This was significantly worse than October's 0.7% fall and the biggest annual decline since February 2021.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said the fourth quarter was an "ugly" period for construction.

"The carry-over — if overall construction output held steady in December — points to construction sliding by 1.3% in Q4 overall, after falling by a revised 0.5% in Q3. Unfortunately, leading indicators suggest output is more likely to have fallen in December," Debono said.

"Unfortunately the outlook for the sector remains bleak. The December PMI pointed to a continued plunge in new orders. Demand is likely to remain subdued for now as mortgage rates only respond to central bank policy tightening with a lag and so likely have further to rise before starting to fall later in the year."