Eurozone construction stabilises as demand strengthens

The Eurozone construction sector looked to have stabilised in September after two months of declines, an industry survey showed on Wednesday.

The IHS Markit Eurozone Construction total activity index was 50.0 in September, an improvement on August’s 49.5 and July’s 49.8. It is the first time the index has topped 50 since June, when it was 50.3.

A reading above 50 indicates an overall increase, while a reading below suggests an overall decrease.

Within that, home building activity continued to grow across the Eurozone. Commercial building saw activity dip, but it was at the slowest pace in the current 19-month sequence of decline. Civil engineering also decreased at a softer pace in September.

Respondents cited stronger demand, though this was offset by a lack of raw materials halting work on site. New orders expanded for the second successive month, with anecdotal evidence suggesting that government incentives and a number of new projects coming to tender were driving the rise in new business inflows.

Staffing levels also rose, with the rate of job creation the fastest since February 2020.

Usamah Bhatti, economist at IHS Markit, said: "The Eurozone construction sector returned to stabilisation at the end of the third quarter.

"Businesses reported an accelerated rise in new orders that was the strongest since May. Yet widespread reports of material shortages and delivery delays dampened activity on site. Nonetheless constructors were confident that activity would continue to recover in line with the economy, and lifted capacities for the fourth month in a row."

The survey was carried out between 13 and 30 September, with the questionnaire sent to a panel of around 650 construction firms in Germany, France, Italy and Ireland.

The Eurozone data coincides with data published on the UK construction sector showing that shortages of both materials and staff had held back the sector’s recovery in September.