European construction declines again

17 February 2011

Construction output in the 27 EU member states fell -7,4% year-on-year in December. The decline in the Euro area was more sever at -12%, according to Eurostat - the statistical arm of the European Commission.

The largest decreases were registered in Germany (-23,6%), Spain (-19,8%) and the Czech Republic (-15,6%), offsetting increases in Sweden (+10,8%), Poland (+10,7%) and Slovakia (+0,5%).

Eurostat said building construction in December decreased -8,9% in the Euro area and -6,3% in the EU27.

December's figures compound November 2010's annual Euro area construction output drop of -6,8% and comes after a precipitous slowdown in the region's output stretching back to October 2008.

UK warning

The news also comes after UK trade body the Construction Products Association warned that falling demand and rising prices were creating "bleak" prospects for the UK construction industry in 2011.

The latest association's latest trade survey found that 47% of light manufacturers and 61% of heavy manufactures said that rising raw material costs had resulted in increased manufacturing costs over the last quarter.

Economics director Noble Francis said, "Falling demand across the industry and sharp rises in costs during 2010, such as the +46% price increase in copper and +80% in iron ore, are exacerbating problems for the industry".

In the UK, 70% of light manufacturers and 56% of heavy manufacturers experienced a fall in sales in the final three months of the year, while 22% of building contractors also reported a fall.

"There is great uncertainty regarding economic activity during the coming year," Mr Francis said.

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