Firms 'looking to the future with skepticism' - economist (Il Sole 24 Ore Radiocor) - London , 05 Sep - In August, the eurozone's purchasing managers' index for the construction sector stood at 41.4, unchanged from the previous month and marking the 28th consecutive monthly decline in construction activity across the euro area, according to data released by S&P Global and Hamburg Commercial Bank.

A reading below 50 signals contracting sector activity, while one above an expansion.

The overall reduction in activity reflected declines across the three largest eurozone economies, with activity in Germany decreasing at the sharpest rate in three months and slightly softer contractions in France and Italy.

'The crisis in the European construction sector shows no signs of abating," said Tariq Chaudhry, economist at Hamburg Commercial Bank. The HCOB PMI remained stagnant in August at 41.4 points, indicating a continued contraction. The particularly weak performance of the largest economies in the Eurozone-Germany and France-weighs heavily on the index.

Especially the housing sector presents a troubling trend.

With the construction sector remaining sluggish, pressure is mounting on the European Central Bank (ECB) to counteract with interest rate cuts, especially as inflation in the Eurozone came in at 2.2% year-on-year in August, nearing the ECB's target rate.

"Rising prices continue to be a significant issue for the European construction sector. Despite weak demand, input costs are still on the rise and even accelerated in August.

While input costs in Germany saw a slight decline, construction firms in France and Italy reported significantly higher costs, largely attributed to increasing raw material prices.

"European construction firms are looking to the future with skepticism. Although new orders and purchasing volumes have seen a slight improvement compared to the previous month, the contraction in these sub-indices remains pronounced. Business expectations for the next twelve months are deeply negative, falling well below the historical average. Consequently, employment in the sector continues to decline.".

AAA-Hob

(RADIOCOR) 05-09-24 09:44:52 (0195) 5 NNNN