August: -0.4% m/m, -8.5% y/y
July: -3.2% m/m (revised from -3,1%)
June: +1.9% m/m (revised from +1.8%)
May: -0.9% m/m (unrevised)
April: +0.1% m/m (unrevised)
March: +6.4% m/m (unrevised)
—
PARIS (MNI) – Construction activity in the Eurozone contracted
further in August, as sharp drops in Spain and the Netherlands offset
strong gains in other peripheral countries, Eurostat said Tuesday.
The 0.4% monthly decline left activity 8.5% below the depressed
levels of a year earlier and nearly 20% below pre-crisis highs.
Building construction led the decline again in August with a 1.7%
drop that gave a 6.9% annual fall. Civil engineering slipped 1.7% on the
month and was 13.1% lower on the year.
(The latest seasonally adjusted estimates are based on data from
seven of Eurozone’s 16 member states.)
Sector activity appears unlikely to regain dynamism this year,
despite ongoing public stimulus for infrastructure projects. Any
recovery next year is likely to be dampened by more restrictive public
spending.
Leading indicators point to a deterioration in the near term.
Sector sentiment as measured by the European Commission recovered
further in September, largely reflecting less negative employment
expectations in Germany and Spain.
However, builders said recent activity had weakened markedly,
especially in Spain, and they were somewhat more negative on order
books, again particularly in Spain.
Construction firms surveyed by the magazine Construction Europe
last month said activity had slowed for the third straight month to the
weakest pace since February. The bulk of respondents still expect an
improvement in a year’s time.
At the six-month horizon, most financial analysts foresee little
change in activity and the rest are marginally optimistic on balance,
ZEW’s September survey showed.
Construction in Spain fell 1.8% in August, receding further after a
pick-up in June ahead of the one-point hike in the VAT on homes sales at
mid-year. Activity was 34.7% below the previous-year level. Having
precipitated the recession, the collapse of the housing bubble is now
holding back the economic recovery.
With a stock of unsold houses in Spain of around 700,000 units, it
could be years before market equilibrium is reached. Analysts at Credit
Agricole estimate that the ongoing sector contraction could dampen
overall economic growth by up to 1% this year and next.
Germany posted a 0.4% downturn in August, retracing a third of
July’s recovery, but was still 1.7% higher on the year. The Ifo
institute’s surveys suggest that activity has leveled out since the
technical rebound in 2Q. Expectations at the six-month horizon have
receded sharply since early spring and are approaching last year’s
average.
In France, activity slipped 0.1% on the month and was 4.6% lower on
the year. While housing permits are recovering slowly, housing starts
continued to decline through August. Fewer builders polled by Insee in
September reported a decline in activity and their near-term
expectations point to a slower contraction ahead. Insee expects
household investment in housing to recover in the second half — enough
to offset the ongoing contraction in commercial construction by the end
of the year.
As usual, monthly data were not released for Italy, where sector
activity recovered 2.5% in 2Q but was still 3.5% lower on the year.
Isae’s sector survey revealed an erosion in expectations for
construction projects in August.
Elsewhere, activity in the Netherlands fell 2.6% on the month and
was 14.1% below the previous-year level. By contrast, Portugal posted a
2.3% monthly rise, giving a 7.3% decline on the year. Activity in
Slovenia was up 5.2% on the month but 12.2% lower on the year. Slovakia
posted a 2.4% monthly gain, for an annual decline of only 0.8%.
–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com
[TOPICS: M$X$$$,M$XDS$]
