Eurozone construction rebounds in March, but outlook uncertain

(Sharecast News) - Construction output across the eurozone bounced back in March after two consecutive months of declines, powered by a strong increase in civil engineering works, though activity is likely to have come under increased pressure in recent months as a result of uncertainty caused by the Iran war. Total production in construction across the single-currency region rose 0.8% over the month, following a 0.8% decline in February and a 1.1% fall in January.

All areas of construction rebounded, though civil engineering work in particular increased 5.7% following a decline of 1.0% February. This was the biggest monthly increase in civil engineering activity since March 2021.

Elsewhere, building construction improved by 1.1% after slipping 0.2% the month before, while specialised construction activities rose 0.5% after a 1.0% fall previously.

Despite the monthly improvement across the board, figures released earlier this month by S&P Global showed that the eurozone construction sector suffered its steepest downturn in nearly two years in April, as input cost inflation jumped to its highest since October 2022.

The S&P Global eurozone construction purchasing managers' index, released on 7 May, fell to 41.7 from 44.6 in March, with indicators in France, Germany and Italy falling sharply. Employment declined for the third month a row, while confidence across the sector deteriorated to its lowest level in 16 months.