April: +0.7% m/m, -2.0% y/y
March: -0.1% m/m (revised from -0.3%)
February: -0.6% m/m (revised from -0.8%)
January: +3.8% m/m (revised from +4.0%)
December: -2.7% m/m (revised from -2.0%)
—

PARIS (MNI) – Construction activity in the Eurozone recovered by
0.7% in April, nearly retracing the downturn since January, thanks to
the ongoing upturn in civil engineering, Eurostat said Friday.

Activity in April was 0.4% above the 1Q average, which rose 1.2% on
the quarter, but still more than 30% below pre-crisis peaks.

Building activity alone was flat in April after two months of
decline, giving a 2.6% decline on the year. Civil engineering expanded
0.8% on the month after a 5.5% rebound in 1Q to stand 0.6% higher on the
year.

The latest seasonally adjusted monthly estimates are based on data
from only five of the Eurozone’s 17 member states, whose combined
results suggest that some non-reporting countries registered significant
monthly gains.

While activity has been gradually recovering in Germany, France and
smaller core economies, the Eurozone sector as a whole is likely to
remain sluggish due to persistent weakness in Italy and the ongoing
slump in Spain and most peripheral countries.

Eurozone builders polled by the European Commission in May said
recent activity had deteriorated after three months of recovery. Overall
sector sentiment has barely improved since October, reflecting the
depressed level of orders. After the 0.8% decline in sector employment
in 1Q, hiring expectations have continued to erode.

The May survey of the magazine Construction Europe also showed a
decline in the balance of respondents who said business was picking up
to 18.5% from 30.8% in April.

In Germany, activity fell back 5.7% in April after 15.6% rebound in
1Q from a drop in 4Q. The Ifo institute’s survey showed sector sentiment
stable in May, with a pause in both the improvement in current
conditions and the erosion in expectations.

Germany’s economic upswing should support investment in commercial
construction, while home building appears to be emerging from years of
stagnation. New residential orders and permits have rebounded sharply
over the past year, as prices have picked up. “A clear recovery can be
seen in the construction not only of single-family homes, but also, in
particular, of apartment buildings,” the Bundesbank noted this month

In France, where activity had bounced back 7.0% in 1Q, April
brought a 0.7% rise. Building starts and permits are recovering
gradually, both for housing and commercial construction. Commercial
builders’ assessment of recent activity in improved in May for the fifth
month in a row to the highest level since the financial crisis exploded,
according to Insee.

However, the rapid rise in urban housing prices, which prompted
warnings from the Bank of France and the IMF this month, could nip in
the bud the recovery in residential construction. The chronic housing
shortage has been aggravated by rising demand in areas where zoning
restrictions throttle supply. Housing starts and permits have lost
momentum in recent months. Home builders report a slowdown in recent
activity and have scaled back near-term expectations to the lowest level
since the start of the year.

Eurostat has stopped publishing adjusted monthly data from Spain,
“due to the volatility of their current working day adjusted data
series.” The annual comparison for April showed a 16.9% decline. Despite
the collapse in Spanish housing starts since the real estate bubble, the
overhang of unsold lodgings is estimated at 650,000 in a country where
there are more homes than households and 82% of the population are
already homeowners. In this situation, any recovery in housing starts
appears “impossible,” the credit insurer Euler Hermes estimated this
month. “The sector is in a lasting crisis.”

As usual, no results for Italy were available for the reporting
month. Activity had contracted another 1.2% in 1Q after a 2.7% downturn
in 3Q. Housing permits have stagnated over the past two years and sector
sentiment has tumbled rapidly in recent months, retracing more than half
of the rebound since the start of last year, according to Istat.
Builders’ assessment of orders fell to an eight-month low in May.

Elsewhere, construction in Portugal fell 4.0% in April and was 5.2%
lower on the year. Slovakia posted a 0.3% decline on the month and a
5.2% annual slide. Activity in Slovenia was down 2.8% on the month and
27.3% lower on the year.

–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

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