Construction activity in the Eurozone contracted sharply in March as measures to contain the coronavirus outbreak hit activity and demand.
The IHS Markit Eurozone construction PMI plunged from 52.5 in February to 33.5 in March, the steepest decline in construction activity since February 2009 during the financial crisis.
The downturn in total activity was broad-based across the eurozone. Italy recorded the sharpest decline from 50.5 points in February to 15.9 in March. Germany registered the slowest contraction of construction output.
Eurozone construction firms cut staff
As construction activity fell sharply in March, eurozone construction firms cut their staff numbers for the first time since January 2017. Across the area, Italy suffered the quickest drop as staffing levels declined at the quickest pace since mid-2012. A lack of new work and greater uncertainty during the lockdown led to further redundancies according to IHS Markit.
In France, firms cust staff numbers at the end of the first quarter amid temporary site closures. It represents the first workforce contraction since May 2017, and the rate of reduction was the fastest for over four years.
Firms scaled back purchases of raw materials for the first time since October 2016. The decline was the steepest recorded in the survey’s 20-year history. Italy was the predominant driver of this decline, followed by France.
New business plunged in March, falling at its fastest rate for over 11 years. After a tentative improvement in February, new business volumes in Italy collapsed in March.
In France, new business placed with building firms fell at the sharpest rate since the nadir of the global financial crisis.
Bernard Aw, principal economist at IHS Markit, said: “Unsurprisingly, business sentiment was seriously dented, with eurozone construction firms expressing pessimism for the first time in nearly four-and-a-half years, hinting at challenging times in the months ahead, especially if the antivirus measures continue for a prolonged period.”