Eurozone construction downturn worsens further in July due to housing

An already deep downturn in euro area construction intensified slightly more last month, the results of a survey revealed.

The HCOB Purchasing Managers' Index for the sector dipped from a reading of 41.8 for June to 41.4 in July.

That marked the quickest pace of decline in activity for six months and was led by a "robust" drop in new business.

"Constructors in the Eurozone are not seeing light at the end of the tunnel. When asked about future output expectations, panellists turned to pessimism as the corresponding index fell almost six points," added Norman Liebke, economist at Hamburg Commercial Bank.

"Pessimism worsened in Germany and France, fearing weaker demand in the upcoming twelve months while optimism softened in Italy to a 22-month low."

In turn, that triggered further job losses, a "steep" reduction in purchases of inputs and a "marked" reduction in the use of subcontractors.

Housing performed worst with output in the subsector shrinking at the fastest pace since April 2020, while in Commercial output dropped at the sharpest pace for six months.

Civil engineering output fell less quickly than in June.

On the other hand, cost burdens in construction rose only "modestly".

Activity in France fell by the most since in January while the decline in Italy was the steepest for nearly two years.

However, the survey compiler described conditions in the sector as having worsened across all three countries covered, France, Germany and Italy.