Italy construction activity improves toward stability in September

The Italian construction sector ended the third quarter nearly stable, supported by a renewed increase in new orders and moderate employment growth, according to the results of a survey conducted by S&P Global and published on Monday.

The Hamburg Commercial Bank purchasing managers' index rose to 49.8 points in September from 47.7 in August, approaching the 50-point threshold that separates contraction from expansion. This data signals the smallest decline in production in three months.

S&P Global said that demand improved, with the first increase in new orders in three months, thanks to increased customer interest and the awarding of public contracts, although the recovery remains modest.

Among the sub-sectors, only residential construction recorded a slight increase in production, while non-residential construction and civil engineering recorded further contractions, with the latter being more pronounced.

Employment increased for the thirteenth consecutive month, with a slight but sharp increase, while the use of subcontractors continued to decline, albeit at a slower pace than in August.

Companies reported increased purchasing activity, linked to the opening of new construction sites and the growth of new orders, but also delivery delays, continuing a year-long trend.

On the price front, purchasing costs continued to rise, but at the slowest pace in over five years. The increases were related to raw materials, energy, and tariffs, while overall price pressure remained moderate.

Looking ahead, Italian construction companies remain moderately optimistic about activity over the next 12 months, even though confidence has fallen to a 13-month low. Positive expectations are supported by the opening of new construction sites and the influx of orders, according to S&P, but uncertainties regarding tax incentives and the general economic environment weigh on them.

Italy construction PMI features a panel of 200 companies in Italy, with responses collected between September 11 and 29.