The euro zone's beleaguered construction sector saw another big drop in output in June, a closely watched survey released on Thursday showed.
Latest H.C.O.B. The euro area construction PMI total activity index fell to 41.8 from 42.9 in May. A reading above the neutral level of 50.0 indicates growth, while a reading below suggests contraction.
It was the second-largest percentage drop in production since mid-2020. Companies reported weak demand and falling orders, leading to further job cuts.
Output declined across all subsectors, with residential construction remaining the weakest.
Among major member states, production also fell sharply in Germany, France and Italy, the European Union's largest economies.
Tariq Kamal Chaudhry, Economist Hamburg Commercial BankHe said the industry is “stuck in the recession with no clear path to recovery.”
“The downturn in the region's three largest economies was particularly severe this month,” he added.
“The eurozone construction sector needs a growth story, but the future outlook is not very bright. Lower inflationary pressures alone are not enough. The interest-sensitive sector needs a monetary policy of deep interest rate cuts. However, there is currently a cautious stance from the European Central Bank.”
The ECB cut its benchmark interest rate by 25 basis points to 3.75% in June for the first time since 2019. But it also sounded cautious and warned that further rate cuts were unlikely in the near term.
