And construction companies “aren’t expecting a swift recovery.”
The signs of strain continue to come thick and fast for the Eurozone’s economy. At the end of last week, it registered a fall-off-the-cliff collapse in its all-important services sector. Also confirmed was a vertiginous downturn in manufacturing. Now it’s the construction industry.
The IHS Markit Construction PMI for the Eurozone, which tracks how executives of unnamed companies perceive various aspects of business at their own company, suffered its steepest decline since February 2009, when Euro Area economies were grappling with the fallout of the first installment of the Global Financial Crisis.
In these Purchasing Managers Indices, 50 is the no-growth line; above 50 means expansion; below 50 means contraction. The lower the number below fifty, the more dramatic the decline. The construction PMI collapsed from moderate growth in February (52.5) to 33.5 in March, its lowest level in 11 years.
The downturn in construction activity was broad-based across both geographical regions, with all three of the biggest economies — Germany, France and Italy — experiencing steep declines, and sub-sectors. Both home building and commercial construction projects were hit hard by the downturn while civil engineering work was hit even harder, suffering its fastest contraction in eight years.
Here are some more sobering takeaways from the report:
- With most of the industry’s activity paralyzed, “eurozone construction firms cut their staff numbers for the first time since January 2017” and at the fastest rate in a decade.
- “The downturn in construction activity also saw firms scaling back their purchases of raw materials and other building inputs for the first time since October 2016. Moreover, the decline in purchasing activity was the steepest recorded in the survey’s 20-year history.”
- “Despite the sharp reduction of input purchases, suppliers’ delivery times in the eurozone construction sector lengthened further in March, and at a rate not seen since the survey started in January 2000.”
- “New business plunged in March, falling at the fastest rate for over 11 years. National data showed a broad-based decline across the eurozone, led by severe falls in Italy and France.”
At the national level, the sharpest decline was registered in Italy, which got hit first by the COVID-19 crisis and was the first European country to halt all non-essential activities, including construction. As a result, its construction PMI collapsed nearly 35 points from 50.5 in February to 15.9 in March, which goes down as the “quickest [rate of contraction] seen since the survey began in 1999.”
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