5th March 2026

Key Findings:

Renewed expansions in total activity and new business
Sustained rise in jobs and fresh increase in purchasing
Strongest cost inflation in over three years

Italian construction companies responded to fresh growth in order books with a slight increase in activity levels, sustained job creation and a renewed expansion in purchasing activity during February. The improvement in new business volumes was moderate in nature and the strongest recorded since July last year. The 12-month outlook subsequently brightened, but remained subdued by historical standards. On the price front, firms faced rising cost pressures again, with the rate of inflation at its highest in over three years, amid reports of increased raw material prices.

Up from 47.7 in January, the headline HCOB Italy Construction PMI® Total Activity Index — which measures month-onmonth changes in total industry activity — edged back into expansion territory in February, posting at 50.4.

Although only slight in nature, the rise in construction output signalled by the index was the first since October last year. Growth was often linked by panellists to improved order books and the opening of new sites.

Of the three monitored sub-sectors, housing and commercial activity rose from levels seen at the start of the year, ending threemonth trends of contraction.

Residential building activity was up at the fastest rate in over a year, but only marginally overall, while growth in commercial construction activity hit an 11-month high and was modest in nature.

On the other hand, civil engineering contracted solidly in February, after having signalled its first expansion in five months in January.

Italian construction firms recorded an uplift in new orders for the first time in four months in February. A number of panel members noted that they had secured new tenders and contracts, while others reported a general improvement in client interest. The expansion was the strongest since mid-2025 and moderate overall.

The trend of growth in workforce numbers was extended to a year-and-a-half in February, as firms reportedly recruited both permanent and temporary workers. Although the rate of job creation was only modest and softer than at the start of the year, it contrasted with the long-run trend of contraction.

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After three consecutive months of retrenchment with respect to purchasing, input buying was raised in February. The increase, reflective of growth in order books and new site openings, was only slight overall.

Average prices paid for inputs were raised once more in February, largely due to upward pressure on raw material prices. The rate of cost inflation intensified for the fifth month in a row and was at its highest in over three years. Rates charged for subcontractor work also increased at a stronger rate in February.

Looking ahead, Italian constructors reported greater confidence in their 12-month forecasts for activity in February. Of the near quarter of companies that expressed optimism, a number linked this to expected growth in new orders and contracts. In the context of the series history, confidence was subdued, however.

Commenting on the PMI data, Jonas Feldhusen, Junior Economist at Hamburg Commercial Bank, said, “These are encouraging data points for Italy’s construction sector. After three consecutive months of declining activity, February marked a return to expansion, with growth momentum more broad-based. Firms reported an improvement in overall order volumes, and employment continued to rise, albeit at a slightly more measured pace. At the sectoral level, residential construction posted a particularly strong gain in the context of the series history, and commercial building also expanded. Only civil engineering saw a renewed decline in February.

“The positive demand impulse observed in February has left its mark on firms’ purchasing behaviour. For the first time in four months, construction companies reported an increase in input purchases. However, this seems to have immediately translated into supplier capacity strains and longer delivery times. Consistent with this, cost pressures have intensified. The relevant price index climbed to its highest level in more than three years, underscoring persistent supply constraints. Still, it is important to note that current cost dynamics remain far removed from the price surge witnessed around 2022.

“The upswing in activity did not yet translate into subcontractor usage in the Italian construction sector. This could be a hint that we should be cautious about the trend in the coming months. If a real impetus is evolving, subcontractor usage should be growing. A first sign of improved demand is subcontractor rates climbing.

“With the recent outbreak of war in the Middle East, there are probably renewed headwinds evolving for the construction sector in the Eurozone. BTP yields surged by about 20 basis points at the beginning of the week. The rates outlook now heavily depends on how the conflict evolves, especially with respect to the Strait of Hormuz, which is a bottleneck for the global oil and gas supply.”

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