Italy's construction sector rebounds after three consecutive months of decline

Investing.com – Italy’s construction sector returned to expansion in February after three months of contraction, with the HCOB Italy Construction PMI Total Activity Index rising from 47.7 in January to 50.4.

Although the growth in construction output was modest, it was the first increase since October last year. Data collected between February 10 and 27 indicated that companies attributed this growth to improved order books and new project starts.

Residential construction activity grew at its fastest pace in over a year, though the increase remained slight. Commercial construction reached an 11-month high, showing moderate growth. Civil engineering expanded in January but contracted in February.

For the first time in four months, Italian construction firms reported an increase in new orders. This expansion was the strongest since mid-2025, with a generally moderate trend, as surveyed companies indicated they had secured new tenders and contracts.

As companies hired both permanent and temporary workers, employment continued to grow for the 18th consecutive month. The pace of job creation was moderate, slightly slower than in January.

Input purchases in February increased after three consecutive months of decline, reflecting growth in order books and new project starts. The overall increase was slight.

Input prices rose in February, mainly due to upward pressure on raw material costs. Cost inflation accelerated for the fifth consecutive month, reaching the highest level in over three years. Subcontractor charges also increased at a faster rate.

Italian builders’ confidence in activity over the next 12 months strengthened in February, although, based on historical data, overall confidence remains subdued.

Jonas Feldhusen, a senior economist at Hamburg Commercial Bank, said that active demand in February prompted construction companies to increase input purchases for the first time in four months.

Feldhusen noted that although activity increased, subcontractor usage had not yet risen. He mentioned that subcontractor rates are climbing, which he described as the first sign of demand improvement.

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