Eurozone construction sector struggles as cost pressures mount
By Abigail Townsend
Date: Thursday 07 May 2026
(Sharecast News) - Eurozone construction saw activity slide in April, a closely-watched survey showed on Thursday, as inflationary pressures started to mount.
The latest S&P Global Eurozone construction PMI total activity index came in at 41.7, down from 44.6 in March and well below the neutral 50.0. A reading above 50.0 suggests growth while one below it indicates contraction.
It was the fastest pace of contraction since August 2024, while new business volumes fell at the sharpest rate in almost 18 months. New orders fell particularly sharply in France and Germany, the bloc's largest economy.
Among sectors, commercial activity saw the biggest decline - posting the largest fall since May 2020 - though residential and civil engineering were also both weaker. The rate of input price inflation, meanwhile, soared to reach the highest since October 2022.
The outbreak of war in the Middle East at the end of February has sent global energy prices soaring and restricted supplies, with the vital Strait of Hormuz too dangerous to use. Around 20% of the world's oil is normally transported through the narrow waterway.
Usamah Bhatti, economist at S&P Global Market Intelligence, said: "The start of the second quarter brought a sharp intensification of price pressures, largely in response to rising raw material costs in relation to the war in the Middle East.
"Muted demand also played a factor in the malaise. Falling demand was often related to rising price pressures, uncertainty and hesitancy among clients to commit to projects. The weakness across the sector weighed on the outlook for activity, with firms signalling the greatest degree of pessimism for 16 months."
The survey coincided with the latest data on retail sales in the Eurozone, published by Eurostat, the statistical office of the European Union. It showed the volume of retail trade had fallen 0.1% in March compared to February, although that was better than the 0.3% decline expected. In the wider European Union retail sales rose 0.3%.
Data for the PMI survey were collected between 9 and 30 April, with questionnaires sent to panels of construction companies in Germany, France, Italy and Ireland.
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