4th December 2025

Key findings:

Residential construction and civil engineering activity fall at slower rates
Softest reduction in new orders for seven months
Business pessimism deepens

The penultimate month of 2025 signalled a further contraction in eurozone construction activity, according to the latest HCOB PMI® survey data. Whilst still sharp overall, the rate of decline eased on the month and was softer than the average seen over the current period of decline (since May 2022). The slower moderation in activity was accompanied by the least pronounced reduction in new order intakes since April. That said, muted production requirements continually fed through to firms’ hiring decisions and purchasing activity. Moreover, firms were increasingly pessimistic about future activity.

The HCOB Eurozone Construction PMI Total Activity Index — a seasonally adjusted index tracking monthly changes in total industry activity — posted 45.4 in November, rising from 44.0 in October. The latest figure signalled that activity continued to fall sharply despite the rate of contraction softening, and the index has now registered below the neutral 50.0 threshold in each of the last 43 months.

The three largest eurozone economies all recorded declines in construction output during November. France registered the strongest decrease, though the rate of reduction was the softest in three months. German construction companies also saw a slower pace of decline, while construction activity in Italy fell modestly, reversing the slight increase recorded in October.

The latest decrease in construction output was reflected across the three monitored sectors of the report. The housing sector continued to record the strongest overall drop in activity, although the rate of decrease eased from that seen a month prior. Commercial construction output fell steeply, and at an unchanged pace from October. More positively, civil engineering activity posted only a fractional decline, that was the least marked in the current three-month sequence.

The continued curtailment of construction activity was primarily attributed to weak demand conditions, as evidenced by a solid drop in new orders. That said, the downturn in order books eased, resulting in the slowest decline since April. All three monitored economies reported decreases in new sales during November, led by a stronger decline Germany, while Italian firms recorded a fall in new order inflows for the first time in three months albeit only marginally. Meanwhile, the moderation in France slowed sharply over the month to the least pronounced for eight months.

In response to muted demand, construction firms in the eurozone reduced their payroll numbers in November. Job shedding has been observed on a monthly basis since March 2023, with the latest round of decrease in headcounts modest overall. France was the only country monitored to record a decline in employment, with the rate of contraction unchanged from October’s post-pandemic record. Italian firms registered a sustained, but only fractional increase in job numbers, while there was an expansion in German construction employment for the first time since March 2022.

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Declining requirements impacted construction firms’ purchasing practices. November saw a sharp reduction in buying activity, though the rate of decline slowed on the month. All three of the eurozone’s largest economies experienced a decrease for the first time in three months, with companies in Germany registering the most rapid rate of reduction. At the same time, all three monitored economies saw supplier performance worsen again, leading to the most pronounced lengthening of average lead times since the start of 2025.

Eurozone construction firms reported weak demand for subcontractors in November, pushing up their availability for the thirtysecond consecutive month. Subcontractor usage fell sharply, albeit less so than in October. Rates charged by subcontractors across the region rose modestly, but at the least pronounced rate for three months.

Input prices at eurozone construction firms rose solidly in November. The rate of input price inflation intensified from a month prior, and was broadly in line with the average seen over 2025 to date. All three countries monitored saw their respective rates of inflation quicken on the month, led by Germany.

Overall sentiment in the currency bloc remained negative in November, with pessimism regarding future activity worsening over the month. Italian firms were alone in projecting an increase in activity, though the level of confidence here fell sharply. The greatest degree of pessimism was seen in France, meanwhile.

Commenting on the PMI data, Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, said, “The construction sector in the three major eurozone countries remains in recession. Both residential and commercial construction continue to decline almost unabated. In civil engineering, the contraction of the past two months has been virtually halted because this sector has returned to growth in Germany. In our view, the continuing weakness of the construction sector is due to relatively high long-term interest rates, the recent acceleration in construction costs, and the slow progress in simplifying building regulations and speeding up building permit procedures.

“Cost developments remain a key problem in all three major eurozone countries. In November, these rose at an accelerated pace everywhere, which is likely in part due to the increase in diesel prices. However, the ongoing shortage of skilled civil engineers and the prices of building materials, which are rising even further from an already historically high level, are also playing a role. This is an unusual situation, as declining construction activity usually leads to falling capacity utilization and lower input prices. The situation is unlikely to ease until the economy as a whole picks up again.

“Employment in the construction sector continues to decline. However, there are significant differences between the three major eurozone countries. In France, the decline in employment remains steady, in Italy the number of people in work is stagnating, and in Germany companies have hired more people for the first time since March 2022. The latter development is likely to be related to the surge in civil engineering activity, while France’s construction sector is being weighed down by political uncertainty. Sustained broad-based hiring will only take place if the construction sector as a whole regains momentum, which is not currently foreseeable.”

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