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Quicker rise in construction activity in eurozone

Staff Writer |
February data pointed a faster rise in eurozone construction activity following January's slowdown.

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The solid increase was driven by upturns in commercial and infrastructure activity, as well as a stronger expansion in housing activity.

Accordingly, there were quicker increases in both employment and purchasing activity.

Meanwhile, input price inflation accelerated to its fastest since March 2012.

Rising from 50.6 in January to 52.6 in February, the IHS Markit Eurozone Construction PMI signalled an acceleration in activity growth at eurozone construction firms.

At the national level, this was supported by a sharp rise in Germany and a return to expansion in France.

Italian firms, however, saw the rate of increase ease for the fourth month in a row.

The improved performance was underpinned by broad-based expansion at the sub-sector level.

Both commercial and civil engineering activity rebounded in February, ending a run of three consecutive contractions for the latter.

Moreover, following a three-month low in January, there was a faster expansion in house building.

Inflows of new business also increased at a quicker rate during February.

In fact, the solid rise was the fastest for nearly a year.

At the national level, there were expansions in each of the 'bigthree' economies, with the fastest recorded in Germany.

Greater workloads in turn had a positive impact on hiring.

Employment rose at the fastest pace for a year and extended the current run of workforce expansion to just over two years.

Concurrently, there was renewed increase in constructors' use of sub-contractors, after the broad stagnation in January.

The stronger showing also extended to purchasing activity, as construction companies reported the strongest increase since last June.

Meanwhile, constructors continued to face sharply rising costs in February.

Input price inflation accelerated to the fastest for almost seven years, driven by widespread increases across the monitored countries.

Sub-contractor rates also increased at the quickest pace for over ten-and-a-half years in the latest survey period.

February data showed a softening of capacity pressures across the eurozone construction sector.

Although supplier delivery times lengthened for the seventy-eighth month in a row, the rate of deterioration in vendor performance was the softest recorded since last May.

Finally, construction businesses in the common currency area maintained positivity towards the business outlook during February.

Moreover, the degree of optimism was at its highest for eight months, as boosted confidence in Germany and Italy offset weaker sentiment in France.

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