Key findings:
- Contractions deepen across all three monitored segments
- Slowest fall in new orders in four months
- Cost inflation eases but remains historically elevated
The eurozone construction sector recorded a further decline in activity in June, with the rate of contraction quickening from that seen a month prior, according to the latest S&P Global PMI® data.
Output fell more steeply across all three monitored segments, led again by housing. New orders also declined, although the pace of reduction eased to the slowest since February. Employment and purchasing activity likewise fell at softer rates, while the deterioration in supplier performance moderated.
Cost pressures remained historically elevated, despite easing to a three-month low. Meanwhile, pessimism across the sector intensified at the end of the second quarter.
The S&P Global Eurozone Construction PMI Total Activity Index — a seasonally adjusted index tracking monthly changes in total industry activity — fell from 43.7 in May to 42.8 in June. The latest reading signalled a robust decline in sector output, one that was sharper than the post-pandemic average.
Construction activity contracted across the three largest eurozone economies, led by an accelerated decline in France. Firms in Italy also recorded a stronger downturn in June. Germany was the only monitored economy to see the pace of contraction ease from May, though the fall in activity remained robust overall.
At the sector level, the downturn was broad-based across all three monitored categories. Residential construction remained the worst-performing segment, followed by commercial activity. Civil engineering recorded the softest fall, although its pace of decline also quickened at the end of the second quarter.
Demand conditions at eurozone construction firms deteriorated further in June, although the rate of contraction in new orders eased to the softest in four months. Weakness in the sales environment was evident across all three monitored countries. France and Germany both recorded slower declines than in May, while firms in Italy reported a slight quickening in the pace of reduction.
On the price front, cost pressures faced by construction firms remained robust in June. That said, the rate of input price inflation eased to the lowest since March. Softer increases in cost burdens were recorded across France, Germany and Italy, with Italian constructors reporting the slowest pace of inflation.
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Despite this, construction companies registered a slightly stronger rise in subcontractor rates. Subcontractor usage was reduced markedly, however, contributing to another solid improvement in availability.
In line with sustained falls in new orders, firms reduced staffing numbers for the fifth successive month at the end of the second quarter. The rate of job shedding was only modest, however, and the softest since March. For the first time since August 2024, all three monitored countries recorded lower employment, led by a renewed fall in Italy that was the sharpest since May 2020. In France and Germany, the rates of workforce reduction eased and were modest overall.
Input buying at eurozone construction firms fell again in June, extending the current sequence of decline to 49 months. France and Germany recorded sharp, albeit softer, decreases in purchasing activity. Firms in Italy reversed the fractional rise seen in May, falling back into contraction territory for the third time in four months.
Despite muted demand for inputs, average lead times lengthened sharply in June. Vendor performance deteriorated across all three monitored countries, led by Germany. The extent of the deterioration eased in each of the three economies, however.
Eurozone construction firms remained pessimistic about the year-ahead activity outlook in June, marking the fourth month in a row of negative sentiment. The degree of pessimism was sharp and strengthened from May. Expectations were weakest in Germany, while pessimism also intensified in France. This contrasted with a marginally optimistic outlook among Italian firms.
Usamah Bhatti, Economist at S&P Global Market Intelligence, said, “The health of the eurozone construction sector remained weak in June, with all three monitored segments recording accelerated declines. As a result, total activity fell at a steeper rate at the end of the first half of 2026. Weak business requirements also led construction companies to lower both purchasing activity and employment further, while pessimism towards the year-ahead outlook strengthened slightly from May.
“There were some tentative positives in the June data, however. New orders fell at the softest pace in four months, while the lengthening of lead times was the least marked for three months amid positive developments regarding the war in the Middle East. In turn, the rate of input cost inflation eased further from April’s recent peak, as all three monitored countries reported softer increases in cost burdens and signs of easing raw material prices.”
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