Eurozone Construction Activity Falls Sharply Amid Ongoing Housing Challenges
Europe: Construction activity in the Eurozone saw a sharp decline in August, driven by ongoing difficulties in the residential sector. The Hamburg Commercial Bank (HCOB) purchasing managers’ index (PMI) recorded a score of 41.4, signalling contraction for the 28th consecutive month. Housing activity suffered the most, with the steepest reduction since April 2020, while commercial activity also dropped significantly. Civil engineering saw a slower rate of decline but remained relatively steep.
New orders fell for the 29th consecutive month, with a slight improvement in the pace of decline compared to July. Workforce reductions continued for the 18th straight month, particularly in Germany, which saw the strongest decrease since May. Delivery times shortened for the fifth consecutive month due to weaker demand, with notable improvements reported in France, Germany, and Italy.
Dr. Tariq Chaudhry, economist at Hamburg Commercial Bank, highlighted the ongoing crisis, stating, “The particularly weak performance of the largest economies in the Eurozone—Germany and France—weighs heavily on the index. Especially the housing sector presents a troubling trend.” He noted the pressure on the European Central Bank (ECB) to consider interest rate cuts as inflation nears the target rate. Rising input costs remain a challenge, particularly in France and Italy, despite weaker demand. Business expectations for the next twelve months remain deeply negative, with skepticism about future growth.
Source: Construction Briefing