Eurozone construction struggles as demand slows

The downturn in Eurozone construction continued at pace in September, a closely-watched survey showed on Thursday, as prices rose and the weakening economic outlook weighed on demand.

The S&P Global Eurozone Construction Total Activity Index came in at 45.3, the fifth consecutive reading under 50. A reading above 50 indicates growth, while a reading below suggests contraction.

S&P Global said the survey had shown the fastest decline in new work since May 2020, and the weakest 12-month outlook since April 2020.

The total activity index was, however, a marginal improvement on August’s print of 44.2. Germany, the bloc’s biggest economy, posted a steeper decline, at 41.8, but the rate of decline eased in France, at 49.1, and in Italy, at 46.7.

Within individual sectors, housing, civil engineering and commercial all registered declines. Housing activity fell at the fastest rate since May 2020.

Trevor Balchin, economics director at S&P Global Market Intelligence, said: “September data rounded off a very weak third quarter for the Eurozone construction sector. Outside of the pandemic, the rate of decline in activity in the third quarter was the strongest since the fourth quarter of 2014.

“The weak demand environment was accompanied by stronger cost pressures in September, as the rate of input price inflation accelerated to a three-month high and remained among the sharpest in the series history.”

Responses were collected from a panel of around 650 constructions firms between 12 and 30 September.