Expansion in eurozone construction activity remains stable

According to the report from IHS Markit, the Eurozone Construction Total Activity Index was unchanged at 50.3 in June, indicating a marginal expansion in construction activity. The increase meant that eurozone construction activity has expanded in each of the latest four months. Growth was linked to work commencing on new sites although some firms highlighted concerns that raw material shortages and increasing cost burdens had dampened new work. House building remained the only monitored sub-sector to signal growth, with further declines recorded for both commercial and civil engineering work.

Work undertaken on housing by eurozone construction firms increased modestly in June. The expansion was the fourth in consecutive months, but the pace of growth eased from that seen in May. A sustained and robust rise in Italian homebuilding activity was complemented by a renewed expansion in German homebuilding. French firms meanwhile signalled a contraction at the end of the second quarter, the first since February.

Eurozone commercial construction activity declined again in the latest survey period. This extended the current sequence of contraction to 16 months, although the pace of the decrease softened from May. Italian firms indicated the sharpest rise in commercial projects since January 2007, while French firms noted a second successive rise. However, this was offset by a marked decline in Germany.

The downturn in civil engineering activity continued in June, as work undertaken on infrastructure projects declined for the twenty-third month in a row. The rate of contraction eased from May and was moderate overall. The fall was also faster than for commercial work. Declines in civil engineering projects in Germany and France remained solid, while Italian firms signalled a slight reduction that was the first in four months.

Eurozone construction companies signalled stronger optimism regarding the year-ahead outlook for activity, the strongest since June 2019. This marked the sixth consecutive month of positive sentiment among. Both Italian and French firms indicated strong confidence in June, with the latter at the highest level since July 2019. German builders remained pessimistic, however.