Eurozone construction activity still subdued despite Feb uptick - PMI
By Frank Prenesti
Date: Wednesday 06 Mar 2024
(Sharecast News) - The contraction in eurozone construction sector continued halfway through the first quarter of the year, despite a slight uptick in activity last month, according to a purchasing managers index (PMI) released on Wednesday.
The latest HCOB construction PMI total activity index rose to 42.9 in February from 41.3 in January, with the housing sector still weak and a "robust" decline in new orders, as demand conditions remained subdued. The downturn has now extended to 22 months, with firms in Germany and France registering large falls in activity.
"The PMI for the construction sector sends a clear message: If the eurozone wants to pull itself out of the recession quagmire, relying on the construction sector is not the way forward," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
"Unfortunately, the sector shows no signs of imminent recovery. On the contrary, order inflows have declined even more sharply in February than in the past four months."
"The decline in activity remains dramatic in the residential construction sector, where building activity has plummeted at a pace not seen in six months. Similarly, in the commercial sector, construction has been consistently decreasing for 23 consecutive months, although the rate of contraction was slightly less pronounced than in the previous month."
"The situation for construction companies is not only complicated by high interest rates but also by persistently high input costs. These rising costs are also reflected in higher rates for subcontractors."
"Surprisingly, the downward trend in activity has not yet translated into lower input prices, possibly due to overall wage increases and energy prices. For instance, oil prices are currently higher than the average of the past year."
Reporting by Frank Prenesti for Sharecast.com
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