Euro area construction growth drops sequentially in January

Construction output in the euro area drops in January. The latest construction output data showed a markedly different picture to the brighter ton of January’s industrial production release last week. Sequentially, construction output dropped 1.4 percent in the month, more than reversing the upwardly revised rise of 1.1 percent in the prior month. The softness was mainly due civil engineering, which fell 2.9 percent. This is the steepest monthly fall in two years. Meanwhile, building construction recorded a fall of over 1 percent.

On a year-on-year basis, total construction rose 1 percent, the weakest annual rate for nine months. There was marked softness in France, where output was nearly 5.5 percent lower in January, while construction in Spain also dropped sharply. On the contrary, Germany recorded a very modest growth of 0.2 percent, while construction output was stronger in Netherlands and Portugal.

“Looking through the monthly volatility, the level of output in January was up just 0.2 percent on a three-month basis. And with sentiment in the sector down in February - admittedly still at a historically elevated level - construction output might well provide only limited support to overall growth in Q1”, noted Daiwa Capital Market Research in a report. 

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