European construction decline steepens

20 November 2009

The rate of decline in European construction output increased in the third quarter of the year, having previously looked like it was bottoming-out, according to new figures from Eurostat. Construction output in the EU27 fell -2,3% in the third quarter compared to the previous three months. In comparison, the quarter-on-quarter fall in the second half was only-1,7%

The fall in overall output was driven by a renewed decline in building work and a slowdown in growth in the civil engineering sector. Output in the building sector was -3,3% lower in the third quarter of the year than in the previous three months.

The growth in civil engineering output meanwhile slowed to just +0,8% among the EU27, compared to +1,9% in the second quarter and +2,8% in the first.

These falls mean construction output at the end of the third quarter was -10,3% lower than it was a year ago. Although civil engineering was up +4,1% in the EU 27 on a year-on-year basis, building activity was -13,6% lower.

Although data was not available for all EU member states, declines in most of the ‘big five' construction markets seemed to be the driver for the decline. On a year-on-year basis, output in Spain was -17,6% lower in the third quarter compared to a year ago. It was followed by the UK (-15,0%), Italy (-13,0%) and France (-9,1%). The only bright spot was Germany where construction output was up +2,4% in the third quarter compared to the same period last year.

Although these results were most significant in terms of the overall European picture, there were other countries with bigger percentage falls, most notably some of the hitherto booming Eastern European markets. Third quarter construction output was down a massive -49,3% in Lithuania, compared to a year ago, while Slovakia was down -24,5%, Romania -21,4% and Bulgaria -17,0%.

However there was growth in the region. Czech construction output was +1,0% higher in the third quarter than it was a year ago, and Poland continued to be remarkably buoyant with a +8,7% rise.

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