Eurozone Construction Downturn Continues

The S&P Global Eurozone Construction PMI fell to 41.7 in April 2026 from 44.6 in March, marking the sharpest contraction since August 2024 and extending a four-year streak of monthly declines. The downturn was broad-based, led by France and Germany, with Italy also contracting sharply. By sector, commercial construction saw the steepest fall since May 2020, followed by residential activity, while civil engineering declined more moderately. New orders dropped at the fastest pace in 18 months, extending a 49-month contraction streak, with particularly weak demand in France and Germany. Employment fell for a third month, with job losses at a six-month high. On prices, input cost inflation surged to a three-and-a-half-year high due to higher materials and energy costs. Purchasing activity declined at the fastest rate since December 2024, while delivery delays persisted. Business confidence weakened further to a 16-month low.

The S&P Global Eurozone Construction PMI fell to 44.6 in March 2026, down from 46.0 in February, marking the sharpest contraction in activity since October 2025 and extending the sector’s decline for nearly four years. France led the downturn with its steepest drop in 18 months, followed by Italy and Germany. By sector, commercial construction suffered the most severe decline, closely trailed by residential building, while civil engineering also contracted, though at a slightly slower pace. New orders plunged at the fastest rate in five months, and job cuts accelerated to a four-month high. Adding to the pressure, input cost inflation surged to its highest level since November 2022, driven by material shortages, shipping delays, and soaring raw material and energy prices, exacerbated by ongoing Middle East conflicts. Meanwhile, business confidence hit its lowest point of 2026, reflecting deepening pessimism across the sector.

The HCOB Eurozone Construction PMI fell to 45.3 in January from 47.4 in December, as demand remained weak and new orders declined. All three major economies reported falling output, with the steepest drop in France and the mildest in Italy, while Germany returned to a sharp decline after a brief rise in December. Housing and commercial construction both weakened, with commercial activity posting its biggest fall since November 2024, although civil engineering edged slightly higher. New orders continued to drop across the region, particularly in France and Germany, prompting firms to cut purchasing activity again. Input costs rose at the fastest pace since April 2023, driven by higher operating expenses across Italy, France and Germany. Despite weak demand, employment rose for the first time since February 2023 as firms in Germany and Italy added staff, while overall sentiment remained pessimistic though slightly less negative than in recent months.