Eurozone Construction Downturn Intensifies in March as Input Costs Surge, New Orders Plunge

Euro area construction sector contraction extended for the 47th consecutive month in March, with the slump fueled by a spike in input prices due to the ongoing Middle East conflict.The S&P Global Eurozone Construction PMI Total Activity Index was down to 44.6 from 46 a month ago, according to survey data from S&P Global published Wednesday. The sector's rate of decline hit a five-month low amid the steepest drop in new orders since October 2025, with all three monitored economies recording a decrease in new sales.France reported the strongest construction output decline in a year and a half, while Italy logged a "renewed and solid" drop. On the flip side, Germany reported a slower reduction in construction activity.Across the three tracked segments, the construction output downturn was most pronounced for the commercial sector, followed closely by the housing segment. While civil engineering activity continued to "fall solidly," the sector's rate of decline eased from the previous month.Against the backdrop of subdued demand and lower output assumptions, builders continue to cut staffing levels for the second straight month, with the pace of job cuts accelerating to a four-month high. French companies reported a "sustained and stronger" contraction in job numbers, alongside a "modest reduction" in Germany. Meanwhile, Italy bucked the trend and reported an increase in construction employment.Purchasing activity continued to decline in March, albeit at a slightly slower rate, across the eurozone's three largest economies. Notably, French construction companies reported the most rapid reduction rate.Looking ahead, the construction firms in the bloc's business confidence and outlook turned negative, with expectations for future activity falling to the lowest point in 2026 so far."Having strengthened to a four-year high in February, the outlook for the eurozone construction sector weakened. Germany, France and Italy all registered negative sentiment in the latest period," S&P Global Market Intelligence economist Usamah Bhatti said. S&P noted that German companies were the "most downbeat."

-- Euro area construction sector contraction extended for the 47th consecutive month in March, with the slump fueled by a spike in input prices due to the ongoing Middle East conflict.

The S&P Global Eurozone Construction PMI Total Activity Index was down to 44.6 from 46 a month ago, according to survey data from S&P Global published Wednesday. The sector's rate of decline hit a five-month low amid the steepest drop in new orders since October 2025, with all three monitored economies recording a decrease in new sales.

France reported the strongest construction output decline in a year and a half, while Italy logged a "renewed and solid" drop. On the flip side, Germany reported a slower reduction in construction activity.

Across the three tracked segments, the construction output downturn was most pronounced for the commercial sector, followed closely by the housing segment. While civil engineering activity continued to "fall solidly," the sector's rate of decline eased from the previous month.

Against the backdrop of subdued demand and lower output assumptions, builders continue to cut staffing levels for the second straight month, with the pace of job cuts accelerating to a four-month high. French companies reported a "sustained and stronger" contraction in job numbers, alongside a "modest reduction" in Germany. Meanwhile, Italy bucked the trend and reported an increase in construction employment.

Purchasing activity continued to decline in March, albeit at a slightly slower rate, across the eurozone's three largest economies. Notably, French construction companies reported the most rapid reduction rate.

Looking ahead, the construction firms in the bloc's business confidence and outlook turned negative, with expectations for future activity falling to the lowest point in 2026 so far.

"Having strengthened to a four-year high in February, the outlook for the eurozone construction sector weakened. Germany, France and Italy all registered negative sentiment in the latest period," S&P Global Market Intelligence economist Usamah Bhatti said. S&P noted that German companies were the "most downbeat."