Euro area’s construction activity records modest growth in April, PMI index falls to 52.1

Construction activity in the euro area continues to grow in April. Constructors recorded a modest growth in activity, extending the current sequence of growth to two-and-a-half years. The IHS Markit Eurozone Construction PMI index dropped to 52.1 in April from March’s 52.2, hinting at a modest rise. Throughout the euro area’s three largest economies, the most rapid growth was seen in Germany, followed by Italy and France respectively.

Looking at the sub-sector level, the sharpest growth in activity was seen in housing, as companies recorded their most rapid rise in 2019 so far. Marginal growth in commercial activity also underpinned the rise in total activity. Meanwhile, civil engineering work dropped for the first time since January, reflecting falls in Germany, France and Italy. New orders placed with the euro area builders increased for the eighth straight month in April. Nevertheless, the pace of growth slowed to its weakest in that period and was only marginal overall.

In the meantime, construction companies in the euro area continued to increase staff numbers in April. Builders have taken on more staff in each month since February 2017. However, the pace of job creation eased to its slowest since January in the latest survey period. France saw a more rapid rise in employment amongst the ‘big-three’ euro area economies. On the price print, cost burdens faced by builders in the euro area continued to rise at a marked rate. However, slower rises in Germany, France and Italy saw the overall pace of inflation ease to one-year low.

Constructors in the euro area bought additional building materials at the beginning of the second quarter. The result extended the current sequence of growth to two-and-half years. Nevertheless, the latest rise in input buying was the slowest seen since January, driven by weaker rises in both Germany and France.

Companies continued to stay positive for a rise in output in the year ahead. Although the extent of optimism was softer than in March, confidence levels continued to be stronger than the historical average.

At 17:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bearish at -61.1349 while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 30.2938 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex