Construction decline moderates in Eurozone, outlook grim

Eurozone construction activity, while still contracting, showed signs of moderating in January 2025.

Construction decline moderates in Eurozone, outlook grim

The HCOB Eurozone Construction PMI climbed to 45.4 from 42.9 in December, signaling the softest downturn since February 2023. This slightly improved picture masks continued challenges across the bloc. Germany and France both saw ongoing declines in construction activity, although the pace of contraction eased somewhat. Italy, on the other hand, bucked the trend, registering slight growth. Across the Eurozone, housing activity remained the weakest sector, experiencing the most significant decline, followed by commercial building and then civil engineering, which fared comparatively better. The flow of new orders continued to diminish, with Germany registering the sharpest drop, indicating weakening demand.

Eurozone: labor market weakens, costs rise, confidence low

The labor market reflected this trend, with continued job cuts, although the pace of reductions slowed. Italy was a notable exception, adding to its construction workforce. Supply chain disruptions worsened, leading to longer delivery times and pushing input costs to a 12-month peak. Despite the somewhat less severe contraction overall, confidence among Eurozone construction firms remained decidedly pessimistic regarding future activity.