Eurozone Construction PMI rose sharply in June

According to the report from IHS Markit, the Eurozone Construction Total Activity Index rose sharply from 39.5 in May to 48.3 in June, indicating the weakest decline in construction activity across the eurozone since February amid a relaxation of measures designed to control the coronavirus disease 2019 (COVID-19) pandemic. Survey data showed France and Italy recorded construction output growth, while Germany posted a further marked decline.

Work undertaken on home construction projects in the eurozone declined further at the end of the second quarter. That said, the pace of contraction eased markedly from May and was only modest overall. The downturn in housing construction activity was led by Germany and France. By contrast, Italy posted a second monthly rise in home building activity.

Commercial building activity across the eurozone fell further in June. The rate of decline slowed further from April's record, but was marked overall. The decline was driven by Germany, while France and Italy registered growth, with the former doing so after three consecutive months of decline. Meanwhile, eurozone civil engineering activity likewise fell further in June, extending the current sequence of contraction to 11 months. The rate of decline was noticeably slower than May but remained steep overall. National data revealed a decline in civil engineering in Germany and Italy, while France posted growth.

New business received by eurozone construction firms fell further in June, though the rate of decline eased noticeably from May. While lower sales were linked to weak client demand, there were reports that the easing of COVID-19 restrictions boosted orders at some firms.

Overall sentiment among eurozone building companies remained negative in June. This was reflected by the Future Activity Index remaining below the neutral 50.0 level despite rising to a four-month high. Firms remained concerned about the impact of COVID-19 measures on investment. Germany and France both reported a negative construction outlook, while Italian constructors’ confidence surged to the highest for just over a year.