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Construction sector rebounds in France

Staff Writer |
February PMI data signalled a return to growth for France's construction sector, following the first decline in building activity for five months during January.

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Supporting the rise was an expansion in new orders, which also recovered after a contraction at the start of 2019.

Firms responded by increasing their purchasing activity and staff numbers, although the rate of job creation eased for the fourth month in a row.

Meanwhile, input costs rose at the sharpest rate for just over seven-and-ahalf years.

The headline France Construction Purchasing Managers’ Index (PMI) recorded 51.3 in February, up from 49.5 in January.

However, despite representing an improved performance, the latest figure indicated only a modest growth rate, and one that remained below the 2018 average (53.0).

Underpinning the rebound in total activity was renewed growth in both residential and infrastructure construction.

The former recorded the slightly quicker expansion, but in both cases the rate of increase was only moderate overall.

In contrast to the trends seen in January, commercial activity was the only subsector to record a contraction.

The rise in French construction activity was driven by expanding new order books midway through the first quarter.

Firms recorded the quickest rate of growth since last October, although the increase was only moderate overall and slower than the average in 2018.

Despite rebounds in both output and new orders, the rate of job creation at French construction firms eased for the fourth month in a row during February.

The latest workforce expansion was only modest overall and the softest since August 2018.

On the other hand, businesses recorded a marked rise in input buying.

French constructors increased their purchases of materials and products at the fastest pace for eight months.

The result also extended the current sequence of growth to 16 months.

Meanwhile, input price inflation accelerated midway through the first quarter of 2019.

In fact, costs burdens faced by French constructors rose at the fastest pace for just over seven-anda-half years.

Panellists often attributed the sharp increase to higher fuel costs.

February's survey showed the continuation of pressure on supply chains, with building companies facing another marked lengthening of supplier delivery times.

That said, vendor performance deteriorated to the least extent for five months, and at a slightly softer rate than last year's average.

Finally, firms remained optimistic towards the business outlook in February.

Although the degree of optimism slipped from January's seven-month high, sentiment remained far stronger than the historical average. â– 

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