S&P Global France Construction PMI: Downturn Endures as Fourth Quarter Begins

Key Findings:

• Construction sector contracts sharply
• All three monitored types of activity in decline
• Material purchases and employment reduced sharply as input cost inflation rises to five-month high

The latest PMI® survey data from S&P Global was indicative of yet another sharp decline in construction activity across France. The volume of new work received continued to shrink rapidly, leading to further drops in purchasing volumes and employment. An intensification of cost pressures was another challenge for builders to contend with.

The headline S&P Global France Construction PMI Total Activity Index is a single measure that tracks changes in total industry activity. Readings below 50.0 indicate a decrease compared to the previous month and the further below 50.0, the faster is the rate of decline being signalled.

At 38.8 in October, down from 39.8 in September, the survey’s total activity gauge fell deeper into contraction territory at the start of the fourth quarter. The latest decline extended the downturn in the construction sector that began in June 2022.

All three types of construction work monitored by the survey saw steep reductions during the latest survey period. Residential – the worst performing sub-sector – and civil engineering posted accelerated declines in October. Commercial construction activity was down substantially, albeit to the least degree since May.

October survey data signalled a sharp drop in demand for new construction projects across France. The volume of new orders received dropped at a pace that was quicker than seen previously and historically pronounced.

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French constructors remained in retrenchment mode as the fourth quarter began. Purchasing quantities were slashed to the greatest extent in five months, while employment trended lower. October’s reduction in workforce numbers was the thirtieth in as many months. The dearth of new projects also led French building companies to lower their usage of subcontractors.

Although construction material demand shrank, average supplier delivery times lengthened further in October. Logistics pressures were underlined by anecdotal evidence, which pointed to rising costs due to transportation and fuel. Indeed, the rate of input price inflation rose to a five-month high during the latest survey period.

Looking ahead, French construction companies remained downbeat towards the year-ahead outlook. Conviction in the pessimistic assessment was strong, with a third of respondents (33%) predicting lower activity in the coming 12 months, more than double the proportion that anticipate growth (15%). The 2027 presidential election was cited as a source of uncertainty, which companies expect to weigh on activity. 

Joe Hayes, Senior Principal Economist at S&P Global Market Intelligence, said, “Recession conditions in France’s construction sector remain in place, according to the latest PMI figures. Such a protracted period of decline points to issues that transcend the business cycle. Residential, commercial and civil construction are all in protracted downturns and the survey’s expectations gauge indicates a significant level of pessimism towards the 12-month outlook. Now, with an uncertain election period approaching, the chances of a recovery blooming are slim, if not zero.”

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