Eurozone construction activity downturn deepens in September

Investing.com -- Eurozone construction activity contracted at a faster pace in September, with the HCOB Eurozone Construction PMI Total Activity Index falling to 46.0 from 46.7 in August, indicating a solid and accelerating downturn across the sector.

The decline was broad-based across all three monitored construction segments, with housing activity experiencing the most pronounced reduction in three months. Commercial activity saw its strongest fall since November 2024, while civil engineering activity declined only modestly.

New orders continued to decrease sharply in September, though the rate of decline eased slightly from August. French companies reported the steepest drop in new order intakes, followed by German firms, while Italian companies recorded a rise in new orders for the first time in three months.

Employment levels across the eurozone construction sector continued to fall, though the rate of job shedding was the least marked in six months. German firms saw a slight acceleration in workforce reductions, while French companies registered the softest decline since May. Italian firms maintained their trend of job creation for the thirteenth consecutive month.

Input price inflation picked up from the previous month, led by the steepest rise in operating expenses for three months in Germany. French and Italian companies experienced softer rates of inflation.

Supplier performance deteriorated at the fastest pace since February, with France and Italy recording longer delivery times. Purchasing activity fell again, though the rate of decline was the least marked since June, with Italian constructors reporting a renewed rise in purchasing.

Business confidence among eurozone construction companies dropped to its lowest level since January, marking the fourth consecutive month of negative sentiment. French firms displayed the greatest degree of pessimism since November 2024, while German outlook remained downbeat. Italian companies recorded their softest degree of optimism in just over a year.

Nils Müller, Junior Economist at Hamburg Commercial Bank, noted that weak demand conditions continued to weigh on output, with the sector facing ongoing challenges from rising costs and deteriorating supply conditions.

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