According to the report from HCOB, activity in the construction sector continued to contract last month, but the pace of the contract was the weakest since December 2023. Overall, eurozone construction companies remained in retrenchment mode, as employment fell and input buying was reduced again, with business confidence sinking to the lowest in 2024 to date.
The eurozone construction PMI rose to 43.0 points from 42.1 points in September. The index remains below 50 points, which indicates a reduction in activity in the sector, for the 29th month in a row. The overall reduction in activity reflected declines across the three largest eurozone economies. In Germany, the rate of decline in activity accelerated compared to September. In contrast, companies in France and Italy saw slightly softer decreases in output which were the slowest since May.
The HCOB said that all three broad areas of the construction sector recorded a lower output, with the housing sector being the worst performing sub-sector for the 26th consecutive month. Civil engineering companies registered the least marked decline, although still steep overall. New orders fell again in October (for the 30th month in a row), with the pace of contract quickened for the first time since July. Employment in the construction sector also fell last month, while the rate of decline was solid overall, despite softening from September. As for the inflationary situation, the rate of input price inflation eased to the slowest since July 2023, with the overall pace of increase weighed down by the fastest decrease in German cost burdens in a year. The data also showed that construction companies in the euro area remained pessimistic regarding the year-ahead outlook for activity. The level of sentiment slipped for the second month running and was the lowest in 2024 so far.