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Marginal rise in eurozone construction activity during July

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Christian Fernsby ▼ | August 7, 2019
July data pointed to another marginal rise in activity at eurozone construction firms.
eurozone construction
Europe   On the cost front, input prices continued to rise
The latest expansion was registered despite new orders remaining broadly unchanged for the second month in a row.

Meanwhile, firms recorded solid increases in employment and purchasing activity, and capacity pressures were evident at suppliers as input delivery times lengthened.

On the cost front, input prices continued to rise at the start of the third quarter, but the rate of inflation eased to the softest since December 2016.

Little-changed from 50.8 in June at 50.6 in July, the IHS Markit Eurozone Construction PMI pointed to a marginal rise in total construction activity.

There were contrasting results across the currency area's three largest economies, with a modest expansion in France and declines in Germany and Italy.

That said, those reductions were only marginal.

At the sub-sector level, growth was driven by a sixth successive monthly expansion in commercial construction activity.

However, the rate of growth eased to the slowest since March and was only marginal overall.

Meanwhile, there was roughly no change seen at civil engineers and home builders registered a stabilisation after June's decline.

New orders placed with construction companies in the eurozone remained roughly unchanged for the second month in a row during July.

Across the currency area's three largest economies, further increases in France and Italy contrasted with a sharp contraction in Germany.

Meanwhile, eurozone building firms continued to increase their staff numbers in July, extending the current run of workforce expansion to two-and-a-half years.

The rate of job creation eased fractionally from June but remained solid overall.

At the national level, employment rose in France, Germany and Italy.

Similar to the trend in hiring, purchasing activity at companies in the eurozone construction sector grew for the thirty-third month in a row during July.

Moreover, the pace of expansion accelerated to the fastest for three months and was solid overall.

Underlying data showed a marginal contraction in Italy was more than offset by increases in Germany and France.

Capacity pressures at suppliers were evident at the start of the third quarter, with average lead times lengthening further.

However, the extent to which vendor performance deteriorated eased to the softest since April 2018.

On the cost front, input prices continued to rise, but the rate of inflation decelerated to the slowest since December 2016.

National data revealed increasing cost burdens in each of the eurozone's three largest economies.

Finally, firms remained optimistic towards the business outlook, although the degree of positivity fell to the weakest for seven months.

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