The report from S&P Global and Hamburg Commercial Bank (HCOB) revealed
on Thursday that the pace of contraction of the companies’ activity in the Eurozone’s
construction sector deepened slightly in June.
According to the report, the HCOB Eurozone construction PMI slipped to 45.2
in June from an unrevised 45.6 in May. The latest reading was the lowest in
three months and indicated a steep shrinkage in output across the region’s construction
sector.
Economists had anticipated the indicator to improve to 47.6. The 50 mark
divides contraction and expansion.
According to the report, June's sizable decline in output was driven
by a sharp reduction in new orders, which, in turn, was due to steeper decreases
in the housing and commercial segments. Meanwhile, civil engineering work grew
for the first time since March 2022. Employment in the sector fell for the 28th month
in a row in June, and input buying declined again, taking the current
contraction sequence to just over three years. Construction firms in the euro
area registered renewed pessimism regarding the outlook for output over the
coming 12 months, the degree of which, however, was among the softest seen over the
past year. On the price front, the Eurozone’s construction sector faced higher cost
pressures for the fourth month running, which lifted the rate of input price
inflation to the highest level since December 2023.
At the country level, construction activity shrank in Germany and France,
the Eurozone’s biggest and second-biggest economies, with the latter seeing
the faster drop. Meanwhile, Italy, the region’s third-biggest economy, registered
expansion of construction activity for the fourth straight month, albeit at a
marginal rate.