Eurozone construction PMI falls further in June

Activity in the eurozone construction sector fell further in June, according to a survey released on Wednesday.

The S&P Global eurozone construction purchasing managers’ index declined to 47.0 from 49.2 in May, marking the worst contraction since February 2021. A reading above 50.0 indicates contraction, while a reading above signals expansion.

The reduction was linked to weaker demand amid acute price pressures and economic uncertainty.

The survey found that housebuilding fell at the sharpest pace since May 2020, when the sector was shuttered by the first wave of the Covid pandemic. Commercial and civil engineering activity fell at quicker rates, the steepest for 15 and 18 months respectively.

By country, Germany saw the sharpest fall in overall activity, although the rate of decline softened from that seen in May, while French firms saw a renewed contraction that was the steepest since last August.

Usamah Bhatti, economist at S&P Global Market Intelligence, said: "Eurozone construction companies reported a sustained downturn in activity halfway through 2022. Construction activity fell at a solid pace that was the quickest for 16 months amid a steep deterioration in new orders. Firms commonly attributed the weakness to higher prices and economic uncertainty, which held back new project tenders.

"Positively, there were tentative signs that price and supply pressures were continued to ease from earlier in the year, as delivery times lengthened to the least extent since January, albeit one that was still severe. This somewhat curbed input price inflation for the second month running, with the rate of increase the slowest for five months. Yet, inflation remained elevated overall. Price and supply concerns continued to dampen the outlook for the year ahead, with firms signalling pessimism for the fourth consecutive month."