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(Sharecast News) - The eurozone construction sector remained in contraction in March as activity fell sharply, although at a softer pace due to a slower decline in new orders according to a survey published on Friday.
HCOB's eurozone construction PMI total activity index came in at 44.8 in March, up from 42.7 in February, the softest reduction in new orders since April 2022, but still well below the 50 mark that indicates expansion.
Employment fell at a softer rate and only marginally, while retrenchment efforts also eased through slower reductions in input buying and subcontractor use. Cost burdens rose only moderately, while the 12-month outlook showed signs of stabilising, the survey found.
The latest data indicated a sharp decrease in total output at the end of the first quarter, driven by marked contractions in Germany and France, with the former experiencing the steepest decline in 2025 so far.
"French firms recorded a strong contraction that nonetheless eased compared to the previous month, while firms in Italy bucked the wider trend to record the fastest expansion since December 2023," HCOB said in a statement.
Weak demand conditions across the eurozone construction sector drove the overall downturn, as new orders fell again in March. However, the rate of decline eased from February and was the least pronounced in just under three years.
Norman Liebke, economist at Hamburg Commercial Bank, said: "The construction sector in the eurozone is still in a deep contraction zone. Even though the HCOB PMI index recovered somewhat in March, the current value is still far from the expansion threshold."
"The activity index has been around this level for almost two-and a-half years and does not appear to be moving away any time soon. Despite the ECB's recent interest rate cuts, the interest rate sensitive sector has not been able to lift itself into the growth zone."
Germany's recent decision to pump money into infrastructure could start to benefit the construction sector from the end of 2025, he added.
"Certainly, improvements in business expectations may be visible soon."
Reporting by Frank Prenesti for Sharecast.com