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Construction activity growth softens in March in France

Christian Fernsby |
March data pointed to a slightly softer rise in eurozone construction activity, with the rate of growth easing in two of the three monitored market groups.

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The result was driven by the slowest increase in new business since a decline last August.

Despite this, firms expanded purchasing activity at the quickest pace for nine months and the rate of job creation was unchanged from February's one-year high.

Meanwhile, input price inflation softened and firms maintained their optimism towards the business outlook.

Falling from 52.6 in February to 52.2 in March, the IHS Markit Eurozone Construction PMI® signalled an deceleration in activity growth at eurozone construction firms.

That said, the result extended the current sequence of expansion to 29 months and still represented a modest rise overall.

At the sector level, the slower growth in total activity was driven by softer rises in both commercial and infrastructure construction.

The former registered the slightly weaker increase, but both expansions were only marginal overall.

Meanwhile, housebuilding grew at a fractionally faster rate than in February to record the quickest expansion in 2019 so far.

Moreover, the rise was solid overall.

A contributing factor behind March's slowdown in overall activity growth was a softer rise in new work.

Business placed with eurozone construction companies increased at the slowest pace since a decline last August.

Although orders grew at a weaker rate, firms continued to increase their staff numbers during March.

Moreover, the rate of job creation was unchanged from February, when it was at its sharpest for a year.

At the national level, this was driven by a faster rise in employment in Germany.

Similarly, purchasing activity at eurozone constructors rose markedly at the end of the first quarter.

The rate of input buying accelerated for the second month in a row to reach its quickest for nine months.

Faster increases in both Germany and Italy outweighed a softer expansion in France.

On the price front, input costs faced by construction firms in the eurozone continued to rise sharply in March.

The result extended the current run of increase to just over three years, however, the rate of inflation eased the slowest in eight months.

Meanwhile, vendor performance deteriorated at a faster rate in the eurozone construction sector.

Supplier delivery times lengthened to the greatest extent so far this year, driven by worsening trends in Germany and Italy.

Finally, constructors in the currency union remained confident of a rise in activity over the coming year.

Notably, the degree of optimism improved from February and was the strongest since June last year.

Sentiment was supported by positivity in each of the 'big-three' eurozone economies.

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