February: -7.1% m/m, -12.9% y/y
January: -0.5% m/m (revised from -0.8%)
December: -2.1% m/m (revised from -1.9%)
November: +1.9% m/m (unrevised)
October: -1.0% m/m (revised from -0.9%)
September: -1.7% m/m (unrevised)
—

PARIS (MNI) – Eurozone construction crashed in February as icy
weather hindered building activity and public works, Eurostat estimated
Wednesday.

After a 2.5% slide since November, the 7.1% tumble in February —
the sharpest drop since the cold wave in December 2010 — pulled
activity down to the lowest level in over 15 years.

“February was a very cold month, and that can have an impact,”
commented a Eurostat expert.

Building activity alone, which had slipped 1.1% in 4Q and another
1.0% in January, fell 6.7% in February. Civil engineering was hit
harder, dropping 9.6% on month after a 1.1% recovery in January from
three straight quarters of decline.

The recovery in construction sentiment from a trough in mid-2009
stalled last year and morale remained well below average at end of 1Q,
pointing to subdued prospects ahead amid the stagnation of overall
activity.

While analysts polled by Germany’s ZEW institute this month were on
balance optimistic for sector activity, nearly half expected little
change in the near term. Indeed, sluggish business activity, tighter
public budgets, tougher borrowing conditions and dismal consumer
sentiment do not argue for a pick-up soon.

In Germany, activity plunged 17.1% in February, by far the steepest
drop among the eight reporting Eurozone countries. The Bundesbank
expects activity to recover as the weather warms. Builders polled by the
Ifo institute remain quite upbeat about medium-term prospects, despite a
modest downward correction in March. Yet 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 slipped 0.4% in February after a 0.6% upturn in
January. Sentiment in French construction has so far held up better than
in other more cyclical sectors. Activity expanded by 0.8% in 3Q and 0.4%
in 4Q. Insee expects a 0.1% dip in 1Q linked to trends in public works
and the cold wave in February. A rebound in public works in 2Q is seen
lifting overall activity by 0.9%.

Spanish construction contracted by 1.5% in February, producing a
12.5% slide since July. The bloated housing market is likely to remain a
drag this year despite the accelerating slide in housing prices, even
after the VAT cut in 3Q. Mortgage lending declined last year and higher
borrowing costs could prolong the crisis as the overhang of unsold homes
is estimated at close to half a million. Banks may be obliged to unload
their holdings as a result of recent reforms.

After a 7.5% downturn in January, construction in Italy dropped
another 9.9% in February and was 23.0% lower on the year — the steepest
annual fall after Slovenia (-27.5%). 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.

The only other Eurozone countries to report monthly data were the
Netherlands (-3.3%), Portugal (-0.3%), Slovenia (-10.3%) and Slovakia
(-2.4%). Quarterly data for 4Q show a steep dive in Greece (-28.3%) and
a further recovery in Ireland (+3.9%).

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

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