According to the report from HCOB, business activity in the eurozone construction sector continued to contract for the 13th consecutive month in May, and reached its lowest level this year, as firms continued to signal weak demand for new projects.
The Eurozone Construction PMI fell to 44.6 points from 45.2 points in April. An index value below 50 points indicates a reduction in activity in the sector. The data indicated a reduction in activity in the three monitored sectors. The biggest drop occurred in the housing sector, while the volume of commercial construction work declined at the fastest pace in the last five months. The only sub-sector to report a slower contraction was civil engineering, although the rate of decline was still solid overall.
New orders declined for the fourteenth month in a row in May, with the pace of contraction being the strongest since December 2022. Respondents stated that the reduction was due to high economic uncertainty. The data also pointed to a further reduction in the number of workers in the construction sector. The pace of job cuts was only modest, but slightly sharper than in April. A number of firms mentioned the non-replacement of voluntary leavers as the key factor behind the latest round of job shedding. Eurozone construction firms signaled a twelfth consecutive decline in input buying during May. Notably, the rate of reduction quickened to a sharp pace that was the joint-fastest since August 2022. The data also pointed to a stronger degree of pessimism among construction companies regarding the prospects for the year ahead. The level of negative sentiment was the strongest since December 2022 amid concerns about the impact of cost inflation, rising interest rates and economic uncertainty.