November: -0.9% m/m, -6.8% y/y
October: +0.3% m/m (revised from flat)
September: -1.6% m/m (unrevised)
August: -0.2% m/m (revised from -0.4%)
—

PARIS (MNI) – Construction activity in the Eurozone dropped 0.9% in
November after a modest uptick in October, reflecting mainly declines in
Germany and France, Eurostat said Wednesday.

Activity was 6.8% below the previous year’s depressed levels and
down more than 20% from pre-crisis peaks.

Building activity alone also contracted 0.9% on the month, giving a
5.7% drop on the year. Civil engineering was down 2.8% on the month and
11.7% lower on the year.

(The latest seasonally adjusted monthly estimates are based on data
from only six of the Eurozone’s 17 member states.)

Activity has been on a downward trend for over three years now. The
1.7% recovery in 2Q was largely a catch-up after the harsh weather in
1Q, when output plunged 4.1%. The contraction resumed in 3Q with a 3.3%
drop on the quarter.

Despite low borrowing costs, sector activity appears unlikely to
regain dynamism soon. Leading indicators suggest that activity may be
bottoming out in most countries. But the unwinding of public stimulus
programs and the ongoing contraction in Spain and Ireland will continue
to weigh on Eurozone results this year.

New construction orders fell nearly 10% in seasonally adjusted
terms in 3Q, retracing almost half the 2Q rebound from the trough in 1Q,
separate Eurostat data show. However, building permits recovered nearly
3% in 2Q from a cyclical low in 1Q and rose almost 5% in 3Q, with gains
led by France, Greece and especially Germany.

The recovery in sector sentiment since June was interrupted in
November and December due to a steep slide in Spain, the European
Commission’s survey showed. Builders reported weaker activity in
December, particularly in Germany, where work was hampered by early
snows.

The January sector survey of the magazine Construction Europe
pointed to contraction in activity this month as well, which the
publishers attributed largely to seasonal conditions. The diffusion
index for activity expected 12 months ahead rose to the highest level in
nearly a year.

The French national statistics institute, Insee, last month
forecasted a pick-up in activity in France and Germany this year, while
predicting that Spain and Ireland would remain in the doldrums.

German construction activity dropped 1.1% in November after a 3.1%
rebound in October, giving a 5.9% gain on the year — by far the largest
annual increase in the Eurozone. Builders surveyed by Ifo reported a
sharp setback in December, but expectations at the six-month horizon
continued to recover from the trough last summer.

In France, where activity has not expanded since July, November
brought a further 1.3% decline, giving a 4.6% drop on the year. Housing
starts have begun to recover gradually and have now surpassed
previous-year levels. Commercial building starts are still down over 20%
on the year, but firms’ near-term outlook has brightened considerably,
according to Insee’s surveys. Overall construction prospects rose to a
two-year high in December.

Eurostat said it has stopped publishing adjusted monthly data from
Spain, “due to the volatility of their current working day adjusted data
series.” The annual decline of 30.2% in November testifies to the
severity of the ongoing adjustment since the burst of the real estate
bubble. Firms polled by the Commission in December said the pace of
contraction was accelerating and that order books were being depleted
faster.

Elsewhere, activity in the Netherlands was flat in November and
3.7% lower on the year. Portugal enjoyed a 4.0% monthly recovery that
retraced a third of the slide over the previous two months, leaving
activity 9.6% lower on the year.

Activity in Slovenia edged up 0.9% on the month after a 10% slide
since August and was 16.0% lower on the year. Slovakia posted a 1.6%
gain in November after a 2.0% upturn in October, giving a 0.8% rise on
the year.

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

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