4th June 2026

Key Findings:

Weaker falls in activity and new business signalled
Second-strongest rate of cost inflation since September 2022
Greater hiring activity amid renewed confidence in the 12-month outlook

The Italian construction sector remained in contraction in May, but there were signs that the downturn eased. Both activity and new orders fell to the softest extents in three months, prompting stronger job creation and the end to retrenchment of purchasing. There was renewed optimism in the year-ahead outlook, while pressure on supply chains and prices brought on by the Middle East conflict eased.

The headline Italy Construction PMI® Total Activity Index — which measures month-on-month changes in total industry activity — rose to 49.4 in May. This was up from 44.8 in April when the index was its lowest in over three-and-a-half years.

At the sub-sector level, weakness was centred on housing and commercial, with both recording modest reductions, albeit ones that were far softer than in April. The civil engineering sector went from worst to best performer over the month having signalled a slight increase in activity.

According to survey respondents, lower output reflected a fall in new orders and the closing of completed sites. The overall reduction in new work was the least pronounced in three months, but still solid in nature. Heightened uncertainty reportedly weighed on demand for construction work. Some firms also noted that they had failed to win tenders.

May saw an improvement in firms’ expectations for activity over the coming 12 months. In a turnaround from that seen in the previous two months, more firms forecast growth than a fall. A number of companies expect to secure new contracts in the near-term.

On the employment front, May data signalled a twenty-first consecutive month of job creation. Hiring activity picked up to its most pronounced since January.

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At the same time, firms’ reliance on subcontractors was down again, as signalled by a second fall in usage in consecutive months.

In contrast with reductions seen in March and April, input buying levels were broadly stable in May.

Still, disruption to supply chains as a result of the Middle Civil Engineering East war caused delivery times to lengthen. Difficulties with transportation and shortages of materials were contributing factors, according to anecdotal evidence. The deterioration was less pronounced than in April, however.

Another consequence of the conflict in the Middle East was upward pressure on costs. Greater outlays on fuel, energy and raw materials were noted in panel member reports. The rate of cost inflation, although down from April, was still substantial.

Eleanor Dennison, Economist at S&P Global Market Intelligence, said, “After a challenging few months due to external factors, the latest set of PMI data suggest that things are moving in the right direction for Italian construction companies. Although sustained declines in output and new orders were signalled, the downturn appears to have lost pace.

“There is certainly still room for improvement, particularly amid sustained reductions in work on housing and commercial projects. Meanwhile, the civil engineering category managed to eke out growth in May.

“The improvement in firms’ growth forecasts, upgraded hiring and lesser reluctance around purchasing provide positive signals. However, it is clear that companies are still feeling the pinch due to steeply elevated costs and pressure on supply chains.”

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