France’s construction sector downturn continues in August – PMI
France’s construction sector continued to deteriorate at a rapid pace midway through the third quarter, a recent survey by S&P Global showed on Thursday.
The construction activity levels in all three monitored segments dropped, with housing once again substantially falling in August compared to the previous month. A lack of interest in new construction projects was also evidenced by a further sharp decline in new orders.
Purchasing activity and employment also declined in August, and business expectations for the next 12 months remained pessimistic.
In August, the headline HCOB France Construction PMI Total Activity Index — which measures the monthly changes in total industry activity — was little-changed from July’s six-month low of 39.7. Experiencing only a marginal rise to hit 40.1 in August, the headline index signalled another steep month-on-month contraction in total construction activity midway through the third quarter.
French construction companies continued to lessen their purchasing activity throughout August, the sixteenth month running that this has been the case. However, the rate of reduction was a little weaker than in July, which saw the fastest pace in just over three-and-a-half years.
Nevertheless, despite less strain on suppliers, input prices hiked at the fastest pace in the year -to-date during August.
French constructors are still pessimistic towards the 12-month outlook for activity. Fears of a worsening in demand led some companies to even expect a contraction over the coming year, anecdotal evidence showed.
“There is no sign of improvement in the French construction sector anytime soon. The HCOB Total Activity Index remained at a level almost ten points below the expansion threshold. Constructors are struggling with weak demand due to restrictive interest rate levels and high charges. Significant interest rate cuts by the ECB (European Central Bank) are needed to revive the French construction sector. Unfortunately, we only expect one more rate cut by September for the rest of the year.” said Norman Liebke, economist at Hamburg Commercial Bank.
Attribution: S&P Global
Subediting: Y.Yasser
