France construction sector downturn accelerates in September

Investing.com -- France’s construction sector downturn intensified in September, with activity falling at a sharper rate as the sector’s contraction extended to 40 consecutive months.

The headline HCOB France Construction PMI Total Activity Index dropped to 42.9 in September from 46.7 in August, indicating a significant acceleration in the sector’s decline, according to data collected between September 11-30.

Housing remained the weakest segment, with residential building work decreasing at the steepest pace in three months. Commercial construction also saw a considerably faster decline, while civil engineering activity returned to contraction after briefly improving in August.

New orders fell sharply as clients showed reluctance to commission new projects amid challenging business conditions. This persistent weakness in both activity and new business led construction firms to continue reducing operations.

Purchasing activity contracted for the 29th consecutive month, while employment levels declined again, though the pace of job cuts was the softest since May. Input price inflation eased to a five-month low, well below the survey average.

Business confidence deteriorated markedly, with the Future Activity Index hitting its lowest level in ten months. Companies cited expectations of fewer tenders, lack of new opportunities, and political uncertainty as factors dampening sentiment. The proportion of firms predicting declining activity (35%) nearly tripled those anticipating growth (13%).

"France’s construction sector remained firmly in contraction territory in September," said Nils Müller, Junior Economist at Hamburg Commercial Bank. "The lack of new projects remains a key drag, as new order inflows fell at a quicker rate, reflecting subdued client appetite amid unfavourable business conditions."

The outlook for the sector remains challenging heading into the final quarter of the year, with all three construction categories - residential, commercial, and civil engineering - now showing deteriorating conditions.

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