European construction output slips

The latest Eurostat data for the construction industry shows construction activity some -1,8% lower at the end of June than it was a year previously. The downturn was more pronounced in the 15-country Euro-area, where a -2,4% downturn was seen.

Eurostat's data indicates there is a downturn in both the building and civil engineering sectors, with the building sector suffering a heavier recession. Building output in the EU27 was -2,1% lower at the end of June than a year ago, and again the Euro-zone was worse with a -3,0% contraction. In civil engineering, the downturn for the EU27 was milder at -1,4%, and less still in the Euro-zone at -1,2%.

The downturn in construction activity seems to be deepening on all fronts. In terms of total output, the -1,8 year-on-year contraction seen in the EU27 at the end of June was the biggest seen this year. The same is true for the individual building and civil engineering markets.

Spanish slump

The most pronounced fall in overall construction output was seen in Spain, where construction output was -15,9% lower at the end of June than it was mid-2007. Data for the previous three months also showed double-digit year-on-year declines in activity, compared to a shallower downturn at the start of 2008.

The other major market to show a downturn was the UK, where construction activity was -4,7% lower at the end of June than it was a year previously. But unlike Spain, where there have been several months of falling output, figures for the UK earlier in the year showed increasing construction activity compared to the year-ago position.

Of the other ‘Big 5' economies, France looks the strongest, with construction output up +1,7% at the end of June compared to a year ago. The situation in Germany was more marginal, with just a +0,1% increase recorded in June, and data fro March, April and May showing lower output levels than the position 12 months previous. Data for Italy was not available.

On the positive side in Western Europe, the Swedish market was up +8,8% compared to a year ago. In Finland data for June was not available, but based on previous months the country is enjoying a marked increase inactivity, with construction output up +9,3% in May compared to a year ago. Austria and the Netherlands are enjoying more moderate growth.

Eastern Growth

But the strongest growth was to be found in central and eastern Europe. The most pronounced was in Poland, the region's largest construction market, where construction output was a massive +20,8% higher at the end of June than a year previously. There was also double-digit growth in Bulgaria (+10,3%), Romania (+12,7%) and Slovenia (+14,9%). Slovakia was a little behind its neighbours with a +7,9% increase in output.

However, not all countries in the region saw their construction markets grow. In the Czech Republic activity was -3,3%lower at the end of June than a year previously, continuing a downturn that was first seen in April.

Although data for June was not available, the situation in Hungary could be similar. Information on the five previous months of the year showed falling output compared to the position 12 months ago, and in May the downturn was put at -6,7%.