Eurozone construction sector's contraction slowed in February, PMI data shows

Investing.com – According to the HCOB Eurozone Construction PMI survey released on Thursday, activity in the Eurozone construction sector slowed in February compared to January.

The overall activity index rose from 45.3 in January to 46.0, indicating a significant decline in output, but the rate of decline eased compared to the previous month.

The decline in construction activity affected all three monitored segments, with the residential sector still performing the worst, followed by commercial activity. The decline in both sectors slowed compared to January.

Civil engineering briefly rebounded at the start of the year but has now fallen back into contraction, recording the most significant decline since May 2025.

At the national level, construction activity in Germany and France contracted at similar rates, with Germany’s decline accelerating. Italian firms recorded growth for the first time in four months, though at a modest pace.

Demand further deteriorated in February, but the rate of contraction slowed to the mildest in three months.

New orders in Germany and France declined more sharply this month. Italy recorded its first increase in new orders in four months, with the fastest growth since June 2025.

Cost pressures increased in February, with input price inflation reaching the highest level since April 2023.

Italy led the overall rise, with operating costs increasing at the fastest pace since January 2023, while Germany’s input price inflation reached a five-month high. Cost burdens for French firms eased slightly.

Construction companies reduced their workforce in February, reversing a slight increase in January. The overall reduction was moderate but the largest since November 2025.

Employment in Germany declined again, while French firms’ employment continued to decrease at a modest pace. Italy saw a slight increase in employment levels.

Purchases of inputs by Eurozone construction firms declined again, extending the contraction streak to 45 months.

Purchasing activity in France and Germany fell sharply and at an accelerated pace, while Italy recorded a slight increase in input purchases for the first time in five months.

Average delivery times lengthened significantly in February, reaching the most notable level in two years. Supplier performance deteriorated in all three monitored countries, with Germany leading. Italian firms experienced their worst deterioration since July 2025.

For the first time in nine months, construction firms expressed optimism about activity prospects over the next year. The degree of positive sentiment was moderate but the most pronounced since February 2022.

German firms were the most optimistic in six years, and Italy’s outlook also strengthened. France remained pessimistic, but the extent of negative sentiment was slight and the mildest in the current 21-month sequence.

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