Eurozone construction sector sees output slump - PMI
By Abigail Townsend
Date: Thursday 04 Jul 2024
(Sharecast News) - The Eurozone's beleaguered construction sector reported another sharp decrease in output in June, a closely-watched survey showed on Thursday.
The latest HCOB Eurozone construction PMI total activity index fell to 41.8 from 42.9 in May. A reading above the neutral 50.0 indicates growth, while one below it suggests contraction.
The rate of decline in output was the the second-strongest since mid-2020. Firms reported weak demand and a slide in order book volumes, leading to further job cuts.
All subsectors saw output decline, although residential construction remained the weakest.
Among leading member states, Germany - the bloc's biggest economy - France and Italy also all saw sharp falls in output.
Tariq Kamal Chaudhry, economist at Hamburg Commercial Bank, said the sector was "stuck in recession with no clear path to recovery".
He continued: "The setbacks in the three largest economies in the zone have been particularly severe this month.
"The construction sector in the Eurozone needs a growth story, but the outlook for the future offers little encouragement. Falling inflationary pressures alone won't suffice. Monetary measures, in the form of a substantial interest rate cuts, are necessary for this interest-sensitive sector. However, caution currently prevails at the European Central Bank."
In June, the ECB trimmed rates for the first time since 2019, by 25 basis points to 3.75%. But it also struck a cautious tone, and warned that further cuts were unlikely in the near-term.
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