S&P Global Eurozone Construction PMI®: Sharpest Fall in Eurozone Activity in Six Months

Key findings:

• Sharpest fall in new orders since April
• Cost inflation accelerates to five-month high
• Pessimism regarding the outlook worsens

Eurozone construction activity declined again in October, and at a faster rate than in September, according to the latest S&P Global PMI® data.

Output fell at the steepest pace since April as declines in the commercial and civil engineering segments quickened, though housing continued to record the sharpest fall. New orders also decreased, and at the strongest rate in six months. Employment and purchasing activity likewise fell, albeit at softer rates than in September.

Cost pressures remained historically elevated and intensified to a five-month high at the start of the fourth quarter. Meanwhile, pessimism across the sector was among the strongest seen in the past two years.

The S&P Global Eurozone Construction PMI Total Activity Index — a seasonally adjusted index tracking monthly changes in total industry activity — fell from 43.4 in September to 42.5 in October. The latest reading signalled a robust decline in sector output, and one that was sharper than the postpandemic average.

Construction activity contracted across the three largest eurozone economies, led by accelerated declines in France and Germany. Italian firms also recorded a reduction, though it was the softest in three months. France posted the steepest overall fall.

At the sector level, the downturn was broad-based across all three monitored categories. Residential construction remained the worst-performing segment, despite a slight easing in the pace of decline. Commercial and civil engineering activity fell at similarly marked rates, with both declines accelerating since September.

Demand conditions deteriorated further in October, with new orders falling at the strongest rate in six months. The weakness was evident across all three monitored economies, each of which recorded a faster decline. French firms saw the steepest contraction.

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On the price front, cost pressures faced by construction firms intensified in October, with input price inflation accelerating to the strongest since May. Cost burdens rose more sharply in France and Germany, while Italian constructors reported a broadly unchanged rate of inflation.

Reflecting higher costs, subcontractor rates rose at a faster pace. However, firms cut back markedly on subcontractor usage, contributing to another solid improvement in their availability.

In line with sustained falls in new orders, construction firms reduced staffing levels for the ninth consecutive month at the start of the fourth quarter. That said, the rate of job shedding was only modest and the softest since July. Workforce reductions eased in France and Germany, while Italian firms registered the strongest increase in hiring since June 2025.

Input buying fell again in October, extending the current sequence of decline to 53 months. Germany and Italy recorded softer decreases in purchasing activity, whereas French firms saw the contraction deepen to the most severe since May.

Despite muted demand for inputs, average lead times lengthened markedly in October. Vendor performance deteriorated to a greater extent across all three monitored countries, led by Italy.

Eurozone construction firms remained pessimistic about the year-ahead outlook in October, marking the eighth consecutive month of negative sentiment. The degree of pessimism was marked and the strongest since April. Expectations were weakest in Germany, closely followed by France, while Italian companies registered a slightly negative outlook for the first time in three months.

Usamah Bhatti, Economist at S&P Global Market Intelligence, said, “The health of the eurozone constuction sector remained weak in October, with all three monitored segments remaining firmly in contraction territory. In fact, total activity fell at the steepest rate since April, amid a stronger reduction in new order intakes. Weak business requirements also led construction companies to lower both purchasing activity and employment further, while pessimism towards the year-ahead outlook also strengthened from September.

“The price and supply front bought further points of concern, as firms signalled another acceleration in average cost burdens at the start of the fourth quarter. The rate of inflation was the highest in five months, and coincided with the steepest lengthening of lead times since July. These developments will be key gauges to watch for signs that the eurozone construction sector can start to move into more positive territory.”

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