The euro area's construction sector continued to struggle in September, as major economies grappled with negative output trends following a sharp decline in new orders, according to survey data from Hamburg Commercial Bank and S&P Global. The HCOB Eurozone Construction PMI Total Activity Index inched up to 42.9 in September from 41.4 in August; however, it remained firmly entrenched in contraction territory.
Among the countries assessed, France recorded the most severe contraction, while Italy and Germany also experienced downturns, albeit at more moderate rates. The region's leading economies saw heightened contractions in infrastructure activity, with construction firms facing muted demand as the third quarter came to a close.
In terms of specific sectors, civil engineering witnessed the steepest drop, yet housing and commercial projects also encountered considerable setbacks. In light of dwindling new orders, builders throughout the eurozone further reduced both employment and purchasing activities during the month, with staffing reductions reaching their highest point since May.
France and Germany reported sharper job losses, while Italy bucked the trend by registering slight employment gains. Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank, provided insight into the data, stating that the outlook appears grim, as the region's construction sector is showing 'no signs of easing.' He stated, 'There's no room for optimism right now.
Order intakes are shrinking alarmingly, and purchasing volumes are in the doldrums. It's hardly surprising that the outlook for future activity remains pessimistic. A monetary policy boost from the ECB would be more than welcome to revive the construction sector, but the ECB's recent communications hardly seem to lift spirits in the industry.' Despite marginal improvements in supply chains and prices, construction firms in Germany and France adopted a more pessimistic stance compared to the previous month.
Conversely, Italian companies showed increased optimism regarding the 12-month outlook, with positive sentiment achieving its highest level since June..