Eurozone construction stuck in recession – PMI

The eurozone construction sector remained entrenched in a recessionary phase, displaying no clear signs of recovery, according to Dr. Tariq Kamal Chaudhry, an economist at Hamburg Commercial Bank (HCOB).

The HCOB Eurozone Construction PMI Total Activity Index in June fell to 41.8 from May’s 42.9, indicating a significant contraction in output across the sector. This decline marked the second-strongest drop since mid-2020, surpassed only by January’s downturn.

Production levels continued to decline across all major eurozone countries in June. Germany, despite showing a slight improvement from previous months, still experienced the most pronounced slump in performance since August 2023.

Meanwhile, both France and Italy reported faster reductions in their construction sectors, with France recording its sharpest output decline since March and Italy posting its steepest drop in nearly two years, albeit remaining the least severe among the three.

The downturn in the eurozone construction industry was widespread across its main categories. Housing activity, although still contracting, showed signs of easing, with the rate of deterioration reaching a six-month low.

Conversely, civil engineering saw its sharpest decline since November 2022, surpassing both commercial engineering and accelerating from previous months.

The weakness in output was largely attributed to a sustained decrease in new order inflows. Order books shrank sharply in June across all monitored countries for the third consecutive month. Notably, Germany saw a less severe decline compared to previous surveys, marking the softest contraction since February 2023.