6th July 2022

Key Findings:

Both output and new orders fall at fastest rates for 16 months
Supply chain disruption eases and curb inflationary pressures
Businesses pessimistic about outlook for fourth month running

The S&P Global Eurozone Construction PMI® is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 650 construction firms in the eurozone. The headline figure is the Total Activity Index, which tracks changes in the total volume of construction activity compared with one month previously.

The S&P Global Eurozone Construction Total Activity Index fell from 49.2 in May to 47.0 in June, indicating a solid contraction in construction activity that was the strongest since February 2021. The reduction was commonly linked to weaker demand amid acute price pressures and economic uncertainty. House building fell at the sharpest pace since May 2020, when the sector was shuttered by the initial wave of the COVID-19 pandemic. Commercial and civil engineering activity fell at quicker rates, the steepest for 15 and eight months respectively.

Work undertaken on housing by eurozone construction firms decreased at a sharp pace in June. The contraction was the second in successive months and the quickest since May 2020.

Eurozone commercial activity fell for the third month running in the latest survey period. The decrease accelerated from the previous survey period and was the sharpest since March 2021.

The downturn in civil engineering activity across the eurozone continued for the third month in a row in June. The rate of decline quickened from May and was the steepest since October 2021.

New business received by eurozone construction companies fell for the third consecutive month in June. The rate of contraction quickened from May and was the quickest since February 2021. Panellists often commented that demand was dampened by higher costs and a challenging economic outlook, which in turn reduced new project tenders.

The Exporting from the UK section of the Construct UK Directory includes
– International Construction Exhibitions – UK Government Support for Exhibiting Overseas – Identifying Suitable Markets – Agent or Distributor – International Project Lead Sources

Supply chain disruptions remained widespread across the eurozone’s largest economies in June, yet delivery times lengthened at a softer rate. The overall extension in lead times was the least severe for five months.

Average cost burdens faced by eurozone constructors increased at a substantial pace during June. The rate of inflation decelerated for the second successive month to the softest since January.

Eurozone construction companies signalled solid pessimism regarding the year-ahead outlook for activity, though the level of negative sentiment eased from that seen in May.

Employment levels among eurozone constructors decreased for the third month in a row during June. The rate of job shedding was little-changed from the previous survey period and was only marginal however.

Latest data indicated a renewed fall in buying activity among eurozone construction companies at the end of the second quarter. Input purchases fell for the first time in 16 months, albeit only fractionally.

Commenting on the latest results, Usamah Bhatti, Economist at S&P Global Market Intelligence, said, “Eurozone construction companies reported a sustained downturn in activity halfway through 2022. Construction activity fell at a solid pace that was the quickest for 16 months amid a steep deterioration in new orders. Firms commonly attributed the weakness to higher prices and economic uncertainty, which held back new project tenders. Positively, there were tentative signs that price and supply pressures were continued to ease from earlier in the year, as delivery times lengthened to the least extent since January, albeit one that was still severe. This somewhat curbed input price inflation for the second month running, with the rate of increase the slowest for five months. Yet, inflation remained elevated overall. Price and supply concerns continued to dampen the outlook for the year ahead, with firms signalling pessimism for the fourth consecutive month.

“By country, Germany saw the sharpest fall in overall activity, though the rate of decline softened from that seen in May, while French firms saw a renewed contraction that was the steepest since last August. Growth at Italian firms meanwhile softened to the weakest in the current 17-month sequence, heading closer to stagnation.”

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