Seasonally adjusted data:

March: +12.4% m/m, -3.8% y/y
February: -10.4% m/m (revised from -7.1%)
January: -0.5% m/m (unrevised)
December: -2.0% m/m (revised from -2.1%)
November: +1.8% m/m (revised from +1.9%))
October: -1.0% m/m (unrevised)
—

PARIS (MNI) – Eurozone construction activity bounced back sharply
in March, more than retracing the slump that had taken hold since the
end of last year, Eurostat estimated Monday.

After a 13.6% slide since November, accentuated by a 10.4% plunge
during an icy February, activity bounced back 12.4% in March, but was
still down 4.5% on average in 1Q after a 1.5% downturn in 4Q.

Building activity alone, which had slipped 1.1% in 4Q. was down
4.1% in 1Q, despite an 11.7% rebound in March. Civil engineering
recovered even faster, with a 16.4% upturn in March, but was still down
4.8% in 1Q after three quarters of contraction.

The construction sector has never recovered from the crash in 2008
and may be dragged down faster as the economy slumps. However, the
overall picture masks great core-periphery divergences, and spotty data
on permits and orders suggest these trends will continue. Builders
remain pessimistic on the whole, the European Commission’s surveys show.

In Germany, which was hardest hit (after Luxembourg) in February,
the sector rebounded 30.7% in March, limiting the 1Q downturn to 1.2%.
Activity has expanded faster here than in any reporting country since
the middle of the past decade. Yet builders polled by the Ifo institute
last month said current conditions were no longer quite as dynamic and
they were less optimistic about future trends. The construction
association HDB expects total sales to grow by just 1% this year in real
terms after +6.5% last year, with residential building up 6%, commercial
construction up 3% and public activity down 2.5%.

In France, activity bounced back 17.8% in March, all but retracing
February’s slump to stand 1.3% higher on the year. Builders polled last
month said recent activity had lost steam and were not optimistic for
the coming months. As the real estate marked winds down, home building
permits are declining. Developers report waning demand and expect
housing starts to decline as well. Commercial construction starts are
far below previous-year levels and firms are not optimistic either.
Insee is counting on a pick-up in public works to lift sector activity
by 0.9% in 2Q.

Italian construction also recouped most of the setback in February
with a 9.5% recovery that still left activity 9.2% lower on the year and
1Q results down 8.8% after three quarters of marked decline. While
sector sentiment has recovered gradually over the past two years, the
recent tightening in mortgage rates, despite abundant ECB liquidity, is
likely to weigh on activity in the coming months.

Spanish construction, by contrast, remained on a downward trend,
sliding 1.8% in March for a 6.4% drop in 1Q after -4.8% in 4Q. The
bloated housing market will remain a drag on activity for the
foreseeable future. With credit terms tightening, demand remains
sluggish despite falling prices. Banks are likely to aggravate the
situation as they unload real estate assets. The plunge in housing
starts appears to be bottoming out at 10% of boom-era levels.

In the Netherlands, activity edged up 0.4% in March, giving an
annual rise of 3.7% but a 1Q drop of 8.5%. Portugal, which was barely
touched in February, sustained a 6.8% drop in March for a 0.3% dip in
1Q. In Slovenia, activity recovered 2.7% on the month to stand 8.4%
higher on the year. In Slovakia, activity recovered 0.9% in March, but
was still 13.5% lower on the year. Current data were not available for
other countries.

Most recent results for Greece showed 4Q activity 34.6% lower on
the year. In Ireland, the annual decline in 4Q was 4.6%.

–Paris newsroom +331 4271 5540; e-mail: ssandelius@marketnews.com

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