France construction decline accelerates in September - PMI

France's construction sector contracted at a sharper pace in September, as a lack of new projects and weak client demand continued to weigh on activity, survey results from Hamburg Commercial Bank and S&P Global showed Monday.

The HCOB France construction purchasing managers' index fell to 42.9 points in September from 46.7 in August, signalling a steeper downturn and extending the sector's contraction to 40 consecutive months.

The figure came below the FXStreet-cited consensus of 48.9 points.

All segments of the industry declined.

Residential building remained the main source of weakness, with housing activity falling at the fastest pace in three months.

Commercial construction also deteriorated markedly, while civil engineering slipped back into contraction after briefly expanding in August.

New business inflows fell sharply, with many firms citing client reluctance to commission projects amid challenging economic conditions.

Companies responded by scaling back operations, reducing purchasing for a 29th consecutive month and trimming staff levels, though the pace of job losses eased slightly.

Cost pressures softened, as input price inflation cooled to a five-month low and remained below the survey average.

Business confidence weakened notably, with the year-ahead outlook for activity falling to its lowest in ten months. Firms cited fewer tenders, political uncertainty and a lack of new opportunities as reasons for their pessimism.

"France's construction sector remained firmly in contraction territory in September," said Nils Muller, junior economist at Hamburg Commercial Bank. "The lack of new projects remains a key drag...reflecting subdued client appetite amid unfavourable business conditions.

"With 35% of firms anticipating a further decline in activity and only 13% expecting growth, the outlook for France's construction sector remains bleak heading into the final quarter of the year."

The HCOB France construction PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers at around 400 construction companies. Survey responses are collected in the second half of each month.

Last week, S&P Global data showed that the France services PMI fell to 48.5 points in September from 49.8 in August, while the manufacturing PMI fell to 48.2 points in September from 50.4.

The composite PMI, which combines both sectors, fell to a five-month low of 48.1 points in September from August's tally of 49.8.