February: -3.3% m/m, -15.2% y/y
January: -0.9% m/m (revised from -2.2%)
December: -1.6% m/m (revised from -1.0%)
November: -1.1% m/m (revised from -1.0%)
October: -0.6% m/m (revised from -0.4%)
September: -1.2% m/m (revised from -1.0%)
—

FRANKFURT (MNI) – Construction activity in the Eurozone contracted
at its fastest rate in 14 months in February, with the unsually harsh
winter likely contributing to the weakness, Eurostat reported on Monday.

Taking into account the revisions in previous months, February’s
3.3% monthly drop resulted in an annual change of -15.2%, the sharpest
decline since February 1996.

Building construction weakness accelerated in February, with output
falling 3.2% on the month, leaving activity 14.9% lower than one year
ago. Civil engineering sank 5.8% from January, resulting in a -15.5%
change.

Better weather in March led to ongoing improvement in construction
sector sentiment, the European Commission reported. Yet with order books
still trending downward and activity deteriorating compared to previous
months, morale remains well below the long-term average.

Looking ahead, the European Central Bank expects the negative
impact of Europe’s unseasonably cold winter to reverse itself later this
year. However, its impact on the construction sector should still be
reflected in 1Q’s figures, the central bank said in its most recent
bulletin.

For this year, the Euroconstruct Group sees modest improvement over
2009’s severe contraction, although activity is still expected to lose
ground. A proper recovery is not expected until 2011.

After plumetting in January, construction output in Germany
rebounded 1.0% in February, but was 16.6% lower than a year ago.

According to firms cited in the most recent purchasing managers
index (PMI) report, the recovery was short lived, however.

Construction firms in Germany reported declines in activity, with
weakness spread across all three broad areas of the sector. Yet, the
indicator showed a marked improvement over the previous month, rising to
45.1 from February’s series-low of 28.9.

Due to clients’ reservations about committing to new investment
spending, new business levels dropped sharply, firms cited in the PMI
report said.

However, a rise in business activity is expected over the next
year. “Positive sentiment is underpinned by expectations of a rebound in
activity following the bad weather conditions seen earlier in 2010,” the
report added.

Construction activity in France dipped 0.6% on the month after
stagnating in January, widening the annual decline to 8.0%.

While sentiment among French builders remained unchanged in March,
firms have reassessed their activity outlook downward and still see
orders below normal, the national statistics institute, Insee, said.

Housing permits over the three months to February fell 9.3%,
primarily due to the near-15% drop in new building projects, the French
Ministry of Development reported last month. However, renovation
projects jumped 45% over the same period, the ministry added.

Output in the Spanish construction sector fell an additional 6.0%
in February, nearly matching January’s decline and widening the annual
fall to 20.5%.

Although they were among the hardest hit during the crisis, Spanish
construction firms appear to be the least pessimistic, with sentiment
rising to the highest level in March compared to all other European
states, the Commission reported in its latest sentiment survey.

A significant upward revision in the new orders assessment, which
rose to its highest level since August 2009, helped boost morale.
However, a majority in Spain still see new business below normal, while
the trend in activity compared to previous months deteriorated notably,
partially undoing February’s gain.

–Frankfurt Bureau tel.: +49-69-720 142, email: frankfurt@marketnews.com

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