New data from Eurostat shows construction output in Europe was +2,1% higher in the first quarter of 2008, compared to Q1 2007. However, month-to-month and quarter-to-quarter data paints a more mixed picture.

Construction output in the EU27 was +1,6% higher in the first quarter of the year than in the final three months of 2007. The most pronounced growth was in Central and Eastern Europe (CEE), with output in Slovenia up +33,0% and Slovakia experiencing a +18,9% quarter-on-quarter rise. There was also a strong rally in Germany, with output +10,5% higher than in the last three months of 2007.

Eurostat's figures show civil engineering was more buoyant than the building sector in the first quarter, with a +2,0% rise in infrastructure work in the EU27, compared to a +1,5% rise in residential and non-residential work.

Despite a good quarter-to-quarter increase in output, monthly data painted a different picture. Total construction output in the EU27 was -2,5% lower in March than in February, with data showing that strong month-on-month increases in January and February were the drivers behind the overall expansion for the quarter.

Some countries saw steep falls in output in March, most notably Slovenia, down -12,2%. The country has seen large monthly swings in output, but the overall trend in the first quarter was for strong growth.

The UK also saw a sharp downturn in March, with output falling -9,0% following a reasonable January and February. As a result, the country's total output for the first quarter was only +0,5% higher than in the last three months of 2007.

Germany also saw a sharp monthly dip in March, with output falling -12,4 compared to the previous month. Unlike the UK however, strong increases in construction activity in the first two months of the year meant overall growth for the quarter was much stronger.

On the downside, construction output in Spain fell -2,9% in the first quarter compared to the last three months of 2007. It was down -1,7% in March on a month-to-month basis.

Annual trends

Despite monthly volatility, European construction output generally remained positive compared to a year ago. Output in the first quarter of this year in the EU27 was +2,1% higher than the first three months of 2007, with civil engineering up +2,8% and building work seeing a +2,0% rise.

Again, growth was strongest in the CEE region, with Slovenia enjoying a +32,8% annual rise in output and Romania not far behind with a 32,2% increase. Lithuania, Poland and Slovakia also saw double-digit rises.

The year-to-year picture was also generally bright in Western Europe, although growth was more subdued. However, Spain saw a share annual fall, with construction output -8,0% lower in the first quarter than it was in the same period in 2007. This was a continuation of a decline that started last summer.

Neighbouring Portugal also saw a year-on-year fall, with output -2,9% lower in the first quarter than the same period last year.

Data comparing March 2008 with March 2007 also pointed to contractions in both the German and UK construction markets. However, both countries saw strong growth in January and February, compared to the same months last year.

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