Eurozone construction contraction eases slightly in July

(Sharecast News) - The eurozone's construction sector remained in contraction in July, though the pace of decline eased slightly from June, according to a survey published on Thursday. The S&P Global Eurozone construction PMI registered 42.9, up from 41.7 the previous month, marking the ninth consecutive month below the 50.0 no‑change threshold. The latest reading points to another sharp fall in activity, driven by weak demand, reduced new project starts and ongoing financial pressures across the sector.

Commercial construction continued to be the biggest drag, with firms reporting fewer tenders, delayed investment decisions and tighter financing conditions.

Civil engineering activity also contracted, though at a slower rate, while residential building remained under heavy pressure amid high borrowing costs and subdued buyer demand. Companies highlighted rising input costs and persistent supply‑chain delays, though inflationary pressures were softer than earlier in the year.

New orders fell sharply again, reflecting weak client confidence and reduced public‑sector commissioning. Backlogs declined for a tenth straight month, and employment dropped as firms continued to cut staffing to align with lower workloads.

Business expectations remained negative, with survey respondents citing political uncertainty, elevated interest rates and a lack of visibility on future projects.

S&P Global said the latest figures highlight a sector still struggling with high financing costs, weak demand and project delays, despite some easing in cost inflation. With interest rates expected to remain restrictive through the autumn, analysts warned that construction is likely to remain a drag on eurozone growth in the third quarter.

Reporting by Frank Prenesti for Sharecast.com