EZ construction sector contracts at faster pace - S&P PMI

The eurozone construction sector contracted at a stronger pace at the end of the second quarter of 2023 according to the latest S&P PMI survey data, as overall activity and new orders fell at the steepest rates in the year so far.

The eurozone construction total activity Index — a seasonally adjusted index tracking monthly changes in total industry activity — fell slightly from 44.6 in May to signal a reduction in overall construction activity for the fourteenth consecutive month.

Any mark below 50 indicates a contraction.

Weaker demand for construction materials and other inputs reduced the pressure on supply chains, which allowed for a further shortening in lead times that was the most marked in more than 14 years, S&P said.

"The reduced demand for inputs also eased inflationary pressures in the sector, as businesses signalled the slowest rise in input prices since March 2016, when the current sequence of inflation began," it added, noting that the pace of decline was the strongest seen since December 2022 and "sharp overall".

On a sub-sector basis, the strongest decrease in activity was reported in residential construction, where the rate of reduction was the most marked seen for six months. The pace of decline in commercial work was unchanged from May's five-month low, while civil engineering activity contracted at the slowest pace since February.

Lower volumes of new work were often linked by respondents to higher cost pressures due to inflation and rising interest rates, as well as a lack of investment across the construction sector.

Reporting by Frank Prenesti for Sharecast.com