The HCOB Construction PMI in France declined to 43.1 in May 2025 from 43.6 in April, signaling a deepening contraction in the country’s construction sector and marking the lowest reading since February.
French construction sector downturn intensifies
This latest deterioration highlights the prolonged challenges facing the industry, which has now remained in negative territory for three consecutive years. The data underscores the lack of meaningful recovery momentum, with structural weaknesses continuing to weigh heavily on sector performance.
The housing segment remained the key drag on overall activity, posting yet another sharp fall in output as high interest rates, affordability issues, and regulatory bottlenecks continued to suppress both demand and new project starts. The decline in residential construction has become entrenched, exacerbated by developers’ hesitancy to launch new builds in the face of rising costs and weak buyer interest. Commercial and civil engineering activity also remained under pressure, though the most acute weakness continued to stem from housing.
New orders contracted for the 25th straight month, pointing to an alarming and persistent demand shortfall. Survey respondents attributed the ongoing slump in new business to delayed investment decisions, prolonged client hesitancy, and a lack of visibility over future funding conditions. Many construction firms noted that slow bureaucratic processes and uncertainty around government housing policy have further stalled project pipelines.
Firms once again trimmed staffing levels
In response to sustained weak workloads, construction firms once again trimmed staffing levels. However, the pace of job shedding eased to the slowest rate in nine months, suggesting that companies may be reluctant to let go of skilled labor, possibly in anticipation of a longer-term rebound. Nevertheless, hiring activity remained subdued, reflecting the broader pessimism in the market.
Input cost inflation picked up to a three-month high in May, driven by rising prices for materials such as insulation, cement, and specialist labor. However, overall cost pressures remained historically moderate compared to the peaks observed in 2022, and firms reported relatively stable supply chains with improved delivery times.
Looking ahead, business confidence in the French construction sector weakened further, with sentiment regarding the 12-month outlook turning more downbeat. Companies cited persistently weak demand, uncertainty around policy support, and limited access to affordable financing as key headwinds. While some firms remain hopeful that potential interest rate cuts and public infrastructure spending could provide support in the medium term, the immediate outlook remains dominated by caution and concern.
