Eurozone PMI signals slower, but still steep fall in construction activity

According to the report from IHS Markit, the Eurozone Construction Total Activity Index rose to 39.5 in May, up from a record low of 15.1 in April. The latest reading nevertheless still indicated a steep decline in construction activity across the eurozone. 

Survey data showed Germany and France recorded a third straight month of decreasing construction output. By contrast, Italy posted a marginal rise in construction activity.

Home building activity across the eurozone fell further in May, though the rate of decline eased considerably from April's record. The downturn in housing construction projects was led by France and Germany. By contrast, Italy posted a rise in home building activity following a two-month period of severe declines.

Work undertaken on commercial construction projects in the eurozone likewise declined further midway through the second quarter. That said, the pace of contraction slowed markedly from a record decrease in April, though still remained steep overall.

Meanwhile, eurozone civil engineering activity fell further in May, extending the current sequence of contractions to ten months. Overall, the rate of decline was substantial, but notably slower than April's record. 

New business received by eurozone construction firms fell substantially further in May, though the rate of decline eased considerably from a survey record set in April. Anecdotal evidence suggested that delays in tenders and suspensions of construction activity amid the COVID-19 pandemic continued to dampen demand.

Business expectations among eurozone building companies remained negative in May, as reflected by the Future Activity Index coming in below the neutral 50.0 level for a third straight month. Concerns were linked to the longer-term impact of the COVID-19 pandemic on construction activity.