S&P Global Eurozone Construction PMI®: Activity Continues to Contract Markedly in September

Key findings:

• Rate of decline remains stronger than trend since mid-2022
• Fastest decline in residential activity since February 2025, led by Germany
• Input price inflation accelerates for first time since April

The latest construction PMI® data for the eurozone from S&P Global showed a further marked contraction of the sector in September. New orders and total activity continued to fall sharply, with a notably steep decline in housebuilding. Despite weak demand conditions, cost pressures rose for the first time since April.

Companies adjusted capacity accordingly with employment, purchases of construction inputs and subcontractor usage all down sharply in September, while the 12-month outlook remained negative.

The S&P Global Eurozone Construction PMI Total Activity Index — a seasonally adjusted index tracking monthly changes in total industry activity — posted 43.4 in September, littlechanged from 43.0 in August and indicating a further sharp contraction in construction activity. As has been the case throughout 2026 so far, the Index remained below its long-run average of 47.1 (since 2000).

For the seventh month running, the decline in construction activity was broad-based across the three largest euro area economies. France (39.8) registered the strongest rate of reduction, albeit a slower pace than in August. In contrast, Germany (43.5) posted a much steeper contraction than in the month prior. For the fifth time in the past six months, Italy (46.7) recorded the slowest fall in construction activity.

The decline in activity was also broad-based when broken down by industry sector. Residential construction recorded the steepest drop and the fastest since February 2025, with a notably rapid contraction in Germany. Meanwhile, commercial construction and civil engineering activity decreased at the slowest rates in seven and two months respectively.

New orders placed with eurozone construction companies continued to fall in September, extending the current downturn in demand to four-and-a-half years. Though marked overall, the rate of contraction eased since August and was softer than the trend over this period. All three countries registered slower declines in September.

Construction firms remained downbeat in their assessment of activity levels over the next 12 months. Forecasts were the most pessimistic since April, linked to a lack of demand, rising costs and squeezed customer budgets. Negative forecasts for construction activity in France and Germany contrasted with positive sentiment in Italy.

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With the outlook remaining subdued and new orders falling sharply, construction firms reduced their workforces on average in September. The rate of job shedding was littlechanged from August, and extended the current sequence of cuts to eight months. Sharp falls in Germany and France contrasted with a further increase in Italy.

In line with lower activity and new orders, purchasing of new inputs by construction companies declined in September. Moreover, the rate of contraction was the fastest in four months.

Suppliers’ delivery times lengthened further in September, despite the latest fall in purchasing activity. That said, lead times increased to the smallest degree since January. Delays were greatest in Italy, while French firms reported only a marginal deterioration in vendor performance.

Lower purchasing volumes in September also reflected sharply rising prices for construction inputs. The rate of inflation accelerated for the first time since April and was comparable to the level seen in late-2022, albeit still below the trend for the second quarter following the outbreak of war in the Middle East. Cost pressures were most intense in Italy, followed by Germany.

September data revealed a further reduction in the use of subcontractors by construction firms in the eurozone, continuing a trend which began in April 2022. The availability of subcontractors continued to improve, although they still increased their charges at a relatively marked rate.

Trevor Balchin, Economics Director at S&P Global Market Intelligence, said, “Demand conditions in the eurozone construction sector remained weak in September. The rates of decline in activity and new orders remained strong despite easing slightly since August, with the residential sector notably weak.

“Construction firms remained in retrenchment mode, cutting jobs, subcontractor usage and purchases of inputs. Supply chain conditions worsened further, but lead times increased to the smallest degree since January, prior to the disruption brought on by the outbreak of the conflict in the Middle East.

“Compounding the challenges facing the sector from weak demand, cost pressures increased in September. The rate of input price inflation accelerated for the first time since April and, excluding the second quarter peak set following the outbreak of the conflict, was back at the highest level since late-2022.

“The combination of weak demand and renewed inflationary pressure inevitably resulted in the yearahead outlook for activity remaining subdued.”

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