In the euro zone's struggling construction sector, official data showed on Thursday that orders fell sharply again in May, weighing heavily on employment.
of H.C.O.B. The euro area construction PMI total activity index rose slightly to 42.9 in May from 41.9 in April, but remained well below the neutral level of 50.0 and one of the lowest in the past 11 years.
A reading below 50.0 indicates contraction, while a reading above 50.0 indicates growth.
Residential activity saw the most notable decline, but commercial and civil construction also struggled.
By member state, economic activity continued to decline in the European Union's largest economies, Germany, Italy and France, but the rate of contraction in all three countries eased.
Construction employment fell to its sharpest clip in four years in May. Hamburg Commercial Bank It would be the first time since October 2022 that Germany, France and Italy have seen a simultaneous decline in the number of employees.
“The construction sector is coming into its own. The manufacturing sector is showing signs of stabilizing and the services sector is in full recovery mode, but the construction sector remains stalled,” said Cyrus de la Rubia, chief economist at Hamburg Merchant Bank.
“Demand conditions remain very weak despite the European Central Bank's efforts to cut interest rates. The sharp decline in new orders suggests that hopes of a near-term recovery are unfounded.”
The ECB is due to announce its latest interest rate decision later on Thursday. It is widely expected to cut its deposit rate from 4% to 3.75%, the first cut since 2019. Like other central banks, the ECB has been raising borrowing costs to combat soaring inflation. But as inflation has fallen, banks are starting to cut rates again.
Data for the Construction PMI survey was collected between May 10-31.
