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Further marginal increase in French construction

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Christian Fernsby ▼ | February 7, 2020
French construction firms recorded another marginal increase in activity during January, with the rate of expansion easing slightly from December.
French construction
Economy in Europe   The reading pointed to another marginal rise
The slowdown came amid softer rises in both new orders and employment, as well as a marked increase in cost burdens.

Topics: French construction

Meanwhile, purchasing activity continued to grow modestly and confidence hit a six month high.

The headline France Construction Purchasing Managers’ Index (PMI) fell to 50.4 in January, down from 50.9 in December.

The reading pointed to another marginal rise in French construction activity that was slightly slower than that recorded in the previous survey period.

At the sub sector level, growth owed exclusively to another modest expansion in commercial activity.

Meanwhile, there were further declines in both home building and civil engineering.

The former recorded only a slight decrease, while the latter registered the quickest contraction for 18 months.

New orders placed with French construction companies continued to increase at the start of 2020.

However, the rate of growth eased to the softest in the current nine month run of expansion.

Similar to the trend in new business, firms increased their staff numbers in January, but the rate of job creation decelerated to the slowest recorded since last March.

The marginal rise in employment nevertheless extended the current run of workforce expansion that began in June 2017.

On the price front, cost burdens faced by building companies in France continued to rise.

Moreover, the rate of inflation accelerated to the sharpest for seven months and was marked overall.

When explaining higher input prices, panellists mentioned elevated recycling and fuel costs.

Meanwhile, purchases of raw materials and other construction inputs grew moderately in January.

The latest increase stretched the current run that began in November 2017, with the rate of expansion little changed from December.

Vendor performance faced by firms in the French construction sector deteriorated further in the latest survey period.

However, the extent to which delivery times lengthened was the least marked for nine months and modest overall.

Despite softer activity growth, firms increased their use of sub contractors for the first time in three months.

The result coincided with a decline in sub contractor availability.

Finally, firms remained optimistic towards the 12 month outlook for activity.

Notably, the degree of confidence increased to the strongest for six months and was historically marked. â–