HCOB France Construction PMI: New Orders Decrease at Fastest Pace in 2025 So Far

Key Findings:

• Construction activity falls amid decline in new orders
• Sharpest reduction in employment since the COVID-19 pandemic
• Firms express increasingly pessimistic outlook

The latest HCOB PMI® survey data indicated that the French construction sector moved deeper into contraction territory at the end of the second quarter of the year. Sharper falls in activity, new orders, employment and purchasing were all recorded, while companies were increasingly pessimistic regarding the year-ahead outlook.

Bucking the generally downward trend, civil engineering activity picked up in June. Meanwhile, inflationary pressures remained relatively subdued.

The headline HCOB France Construction PMI® Total Activity Index — which measures month-on-month changes in total industry activity — dropped to 41.6 in June, down from 43.1 in May and well below the 50.0 no-change mark. The index signalled the most marked reduction in total construction activity since February. Output in the sector has now decreased on a monthly basis for just over three years.

Underlying data showed that the decline in overall construction activity was driven by sharp falls in housing and commercial activity. Housing posted the sharper contraction, seeing activity decrease to the largest extent since September 2024. Activity on commercial projects fell at the fastest pace in eight months.

Bucking the wider trend, civil engineering activity returned to growth in June, ending a four-month sequence of decline. The increase was modest, but the fastest in just over a year.

Anecdotal evidence suggested that the fall in total construction activity mainly reflected declining new orders. New business decreased for the thirty-ninth month running, and at the fastest pace in 2025 so far. Panellists reported strong competitive pressures amid a lack of opportunities to secure new work.

Construction firms responded to lower workloads by cutting their employment and purchasing activity further in June.

Staffing levels decreased for the fourteenth month running, and at the fastest pace since January 2016 if the COVID-19 pandemic period is excluded.

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Input buying also decreased at a faster pace than in May, and markedly overall. Despite the reduction in demand for inputs, suppliers’ delivery times lengthened in June, the first time in four months in which this has been the case.

The rate of input cost inflation remained relatively muted and was unchanged from that seen in the previous survey period.

Alongside reductions in employment and input buying, construction firms also lowered their use of subcontractors, and to the largest degree since last November. The availability of subcontractors subsequently improved, while their quality was unchanged over the month. The rates charged by subcontractors increased at the fastest pace since October 2023.

Declining demand meant that firms maintained a pessimistic outlook for construction activity over the coming year. Moreover, sentiment dropped for the third month running and was the lowest since January. More than 28% of respondents predicted a fall in activity over the next 12 months, while 16% predicted a rise.

Commenting on the PMI data, Norman Liebke, Economist at Hamburg Commercial Bank, said: “Construction activity in France took a sharper downturn in June. The HCOB PMI dropped to 41.6, from 43.1 in May, marking the steepest contraction in total activity since February. Housing and commercial projects saw particularly steep declines, with housing registering its worst performance since September 2024. Civil engineering was the only segment to buck the trend, returning to modest growth after four months of decline.

“New orders continued their long descent, now falling for the thirty-ninth month in a row. Firms reported fierce competition and few opportunities for new work, prompting further cuts in purchasing and employment. Staffing levels dropped for the fourteenth month straight month and at the fastest pace since January 2016, if the pandemic period is excluded. Input buying also fell more sharply, even as delivery times lengthened for the first time in four months.

“Confidence keeps slipping. Business sentiment around the year-ahead outlook dropped for a third consecutive month and hit its lowest point since January. More than 28% of surveyed firms expect activity to fall further over the next twelve months, while only 16% foresee improvement. With subcontractor usage also down and their rates charged rising, cost concerns are building alongside deepening pessimism across the sector.”

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