Eurozone construction sector continues to struggle
The Eurozone’s beleaguered construction sector saw another sharp fall in orders in May, official data showed on Thursday, weighing heavily on employment.
The HCOB Eurozone construction PMI total activity index for May was 42.9, up slightly on April’s 41.9. But it remains well below the neutral 50.0 level, and was one of the lowest readings of the last 11 years.
A print below 50.0 indicates contraction, while one above it suggests growth.
Housing activity saw the most pronounced decrease, although both commercial and civil engineering also struggled.
Among individual member states, activity continued to decline in Germany - the bloc’s biggest economy - Italy and France, although the rates of contraction did soften in all three countries.
May also saw the quickest drop in construction jobs in four years, Hamburg Commercial Bank noted. It was the first time since October 2022 when lower staff numbers have been concurrently seen in Germany, France and Italy.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, said: "The construction sector is living a life of its own. While the manufacturing sector is showing the first signs of stabilisation, and the service sector is in full recovery mode, construction remains stuck in the mud.
"Even though the European Central Bank is about to cut interest rates, demand conditions remain exceptionally weak. The rapid decline in new orders suggest that any hope of a near-term recovery is unwarranted."
The ECB is due to announce its latest decision on interest rates later on Thursday. It is widely expected to trim the deposit rate to 3.75% from 4%, the first cut since 2019. In common with other central banks, the ECB hiked the cost of borrowing to tackle soaring inflation. But with inflation now falling back, bankers are starting to cut rates once again.
Data for the construction PMI survey was collected between 10 and 31 May.