Europe construction output stable in July but nearly 4% lower year on year

Morgan Condon

17-Sep-2020

LONDON (ICIS)–The European petrochemicals-intensive construction sector was relatively stable in July but nearly 4% lower year on year, the EU’s statistical agency Eurostat said on Thursday.

Production in July edged up by 0.2% in the eurozone, month on month; in the wider 27-country EU, it fell by 0.1%.

However, construction output declined by 3.8% in the 19-country currency union in July, year on year; in the EU it fell 3.9%.

From May, the easing of lockdown measures has led to increased activity in construction.

In June, growth had risen by 5.1% in the eurozone and by 3.8% in the EU.

Click on image to enlarge


This uptick in activity could provide more continued support for the petrochemicals sector as construction is a key downstream market for many materials.

The monthly increase in output in the eurozone was driven by an uptick in civil engineering, or public works, up by 1.1%.

Building construction – residential and commercial space – remained stable.

The largest monthly decrease in activity was recorded by Germany at -4.3%, while France marked a 5.0% uptick on June.

PANDEMIC-INDUCED INVESTMENTS
An increase in civil engineering could indicate that governments are investing in infrastructure to provide support to the economy.

Building construction in Europe remains under pressure as economic stagnation in the services sector has put pressure on private companies.

Equally, expectations that unemployment is set to spike make households wary of spending in big-ticket items.

Growth in the European construction industry is unlikely to keep pace with other regions; globally, the sector is expected to expand 35% to 2030, according to analysis from Oxford Economics.

The economic outlook remains woeful, however; the eurozone’s inflation rate turned negative in August, said Eurostat earlier on Thursday.

At -0.2%, prices fell on the back of decreases in energy and industrial goods; the latter is also a petrochemicals-intensive sector.

Front page picture: A construction site in the UK in May, when lockdown measures started to be lifted
Source: Matt Dunham/AP/Shutterstock

Focus article by Morgan Condon

To visit the ICIS construction topic page click here

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