Sharpest decline in Eurozone construction activity for five months amid Iran war

In the latest S&P Global Eurozone Construction Purchasing Managers’ Index (PMI), buyers pointed the finger at surging energy prices, as the Eurozone PMI dipped to 44.6 in March (where any score below 50.0 indicates a contraction).

Construction buyers have also become more pessimistic regarding the outlook for the coming year, reversing a brief spell of positive sentiment in February.

The three largest Eurozone economies – France, Germany and Italy – all registered declines in construction activity during March.

France recorded the strongest decrease, with the biggest drop in activity for a year and a half. Italian companies also saw a “solid decline”.

But there was a slower reduction in activity in Germany.

By subsectors of the construction industry, it was commercial work that saw the strongest overall fall in activity, followed by residential construction. Civil engineering fell but the rate of decline was softer than that in February.

Demand was also weak, with a “marked drop” in new orders. All three major Eurozone economies reported decreases in new sales, led by a stronger decline in Germany. Italy saw a renewed fall in new orders, while the drop in France slowed month on month but still left orders at a low level.

Buyers in all three countries registered pessimism at the same time for the first time since August 2022, with German firms the most downbeat. Buyers were also at their most downbeat in 2026 to date.