Eurozone Construction Slump Persists in August Amid Worsening Demand
Construction activity in the euro area fell at a quicker pace in August amid a sharp drop in new orders as demand conditions worsened, according to survey data from S&P Global published Friday.The seasonally adjusted S&P Global Eurozone Construction PMI Total Activity Index decreased to 43 from 44.3 in July, largely reflecting lower new order intakes, which saw the fastest rate of decline since April.France recorded its steepest fall in construction output since May 2020, while companies in Italy saw the fastest decline in activity in four years. In contrast, businesses in Germany saw the weakest rate of decrease thus far in 2026.Among the three monitored segments, the contraction was most pronounced in housing, while commercial companies also experienced a sharp fall in construction activity in August. Civil engineering also logged lower activity, although the reduction was at a softer pace.Meanwhile, builders across the eurozone cut staffing levels in August following a drop in new business, with French and German companies reducing their headcount. Bucking the trend was Italy, which increased its construction employment for the second straight month.Purchasing activity was also down during the month, with construction companies in France and Germany reporting a softer decline in purchasing, while Italian builders saw the steepest reduction since January 2023."August data revealed a sharper downturn in construction activity, largely in response to a steeper deterioration in demand conditions," S&P Global Market Intelligence economist Usamah Bhatti said. "Weakness across the sector weighed on the outlook for activity, with firms signalling pessimism regarding the year ahead. According to panel members, headwinds to activity stemmed from inflationary concerns and the war in the Middle East. Companies will take heart from the fact that overall cost inflation trended downwards again to reach a six-month low, however."