According to the report from HCOB, activity in the construction sector continued to contract in March, but the pace of the contract eased compared to the previous month amid the softest reduction in new orders since April 2022. Meanwhile, employment fell at a softer rate and only marginally, while construction firms at least downbeat on outlook since early-2022.
The eurozone construction PMI rose to 44.8 points from 42.7 points in February. Economists had expected the index to reach 45.1 points. The index remains below 50 points, which indicates a reduction in activity in the sector, for the 35th month in a row. Contractions in construction activity were observed in Germany and France, while firms in Italy bucked the wider trend to record the fastest expansion since December 2023.
The HCOB said that all three broad areas of the construction sector recorded a lower output. The housing sector remained the worst performer in March. Declines in civil engineering and commercial construction softened from February, with the latter experiencing the least marked reduction since February 2023. New orders in the construction sector fell again in March, but the rate of decline eased from February and was the least pronounced in just under three years. Employment in the construction sector also fell last month, with the rate of job shedding was only marginal and the softest since April 2023. As for the inflationary situation, input costs increased moderately in March. Inflation of operating expenses was little changed from the previous survey period and remained well below the series average. The data also showed that construction firms remained downbeat in their expectations for output over the coming year. However, the degree of pessimism softened from that in February and was the least pronounced since the current sequence of negative forecasts began three years’ ago.