The eurozone’s construction sector is suffering its worst decline since the pandemic brought the economy to a near-standstill in 2020. The gloomy findings underline how rising borrowing costs, sharply higher raw material prices and worries that a recession could accelerate a fall in property prices are all weighing on the European construction industry, according to Financial Times. December’s S&P Global eurozone construction purchasing managers’ index, released on Thursday, showed a total activity index of 42.6, down from 43.6 in November. Figures below 50 indicate declining activity.
The data marked the eighth consecutive month of contraction in home building. Activity declined in all three of the 20-nation bloc’s biggest economies – Germany, France and Italy.
The figures, based on a survey of purchasing managers at 650 construction companies, are the latest sign of declining activity in European economies affected by the crisis in Ukraine and the resulting surge in energy and other costs.
The construction sector ended 2022 on a “negative note” with a “sharp fall” in building activity, said Laura Denman, an economist at S&P Global Market Intelligence.
The final three months of 2022 marked the index’s worst quarterly performance since the April to June quarter of 2020, when building activity was disrupted by the pandemic.
Excluding periods of Covid-19 lockdowns, total home-building activity dropped at the sharpest rate since March 2013 and new orders for all construction projects declined at the fastest rate since September 2014, S&P said. The biggest falls in both cases were in Germany.
Commercial building activity also fell for the ninth consecutive month, it said, adding that the biggest drop was in France.
“December data suggested that firms were anticipating challenging economic conditions to continue into the future,” Denman said. She added, however, that there was a “sustained easing” in both cost and supply pressures.
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