Eurozone construction sector struggles as new orders fall

The HCOB Eurozone Construction PMI Total Activity Index — a seasonally adjusted index tracking monthly changes in total industry activity — dropped to 41.9 in April from 42.4 in March, signalling a “sharp and accelerated reduction in total construction activity across the euro area”. Any measure below 50 indicates a contraction.

This led to a further reduction in construction activity and retrenchment of employment and purchasing. Companies were also pessimistic regarding the year-ahead outlook, HCOB said.

However, there was an easing in price pressures, while supplier delivery times improved for the first time in four months.

“Activity has now fallen on a monthly basis throughout the past two years, with the latest fall the most pronounced since January. The overall reduction in activity reflected declines across the three largest eurozone economies in April,” HCOB said.

“Activity in Italy decreased for the first time in seven months, joining Germany and France in contraction mode. That said, the modest fall in Italy was still much softer than those seen elsewhere.”

HCOB chief economist Cyrus de la Rubia said the sector “appears to be even further from recovery compared to the previous month”.

“Civil engineering activity is in a bad state, commercial activity is worse and housing activity looks bleak. While the performance of housing and civil engineering is similarly as bad than in previous months, the crisis in commercial building activity, including offices, has deepened.”

“With the marginal softening of the fall in new orders, any expectation of a near-term recovery seems unfounded.”

Reporting by Frank Prenesti for Sharecast.com