The Hamburg Commercial Bank (HCOB) Construction PMI Total Activity Index scored industry activity at 44.8 in March (where anything less than 50.0 indicates a decline). That was up slightly from 42.7 in February.

The decline in new orders was the softest since April 2022, according to the survey. While still in decline, new orders fell at a slower rate than in February.

Germany and France drove the fall in activity in March. Germany experienced the steepest decline of 2025 so far, while French firms also recorded a contraction that was nonetheless less pronounced than in February.

By contrast, Italian companies recorded their fastest expansion since December 2023.

The housing sector was once again the main culprit for the decline in activity across the Eurozone. Declines in civil engineering and commercial construction activity softened from February, with the latter seeing the least marked reduction since February 2023.

Input buying also decreased further in March, although there were also softer signs of retrenchment here, the survey said. The downturn was led by French and German companies, as Italian firms recorded the strongest increase since January 2024.

Eurozone companies were downbeat in their expectations for output in the coming year, although they were less pessimistic than they were in February. HCOB said that the degree of pessimism was the least pronounced since the current sequence of negative forecasts began three years ago. Negative sentiment moderated in Germany, while Italian firms expressed their strongest degree of optimism in three months.

Commenting prior to the tariffs announced by US President Donald Trump last week, Norman Liebke, economist at Hamburg Commercial Bank, said, 鈥淭he construction sector in the eurozone is still in a deep contraction zone. Even though the HCOB PMI index recovered somewhat in March, the current value is still far from the expansion threshold. The activity index has been around this level for almost two-and-a-half years and does not appear to be moving away any time soon. Despite the ECB鈥檚 recent interest rate cuts, the interest rates-sensitive sector has not been able to lift itself into the growth zone. We expect gains due to the planned German investment package by the government, which could start to benefit the construction sector from the end of 2025. Certainly, improvements in business expectations may be visible soon.鈥�

Third month of falls in UK

Meanwhile, activity levels in the UK fell for the third month in a row. The headline S&P Global UK Construction Purchasing Managers鈥� Index (PMI) posted a score of 46.4 in March. That was a slight improvement on a 57-month low of 44.6 in February.

Civil engineering (38.8) was the weakest-performing area of activity in March, which buyers attributed to delayed decision-making on new projects and subdued pipelines of major infrastructure work.

Residential activity declined at a slower pace than in February but was still in negative territory at 44.7, with buyers blaming weak demand conditions, although some suggested easing borrowing costs had helped to support confidence.

Commercial building (47.4) decreased only moderately in March, linked to lacklustre UK economic prospects and the impact of rising geopolitical uncertainty on clients鈥� investment spending.

Confidence levels across the construction sector meanwhile slipped to their lowest since October 2023, amid lower workloads, elevated interest rate, and worries the broader economic outlook.

Tim Moore, economics director at S&P Global Market Intelligence, said, 鈥淐onstruction companies remained cautious about their year ahead growth prospects, as fewer sales conversions and a third successive monthly reduction in total new work hit confidence levels.

鈥淥verall business optimism slipped to its lowest since October 2023. 鈥淎 lack of new projects, alongside pressure on margins from rising payroll costs, led to hiring freezes and the non-replacement of departing staff in March. The net result was the fastest pace of job shedding across the construction sector for nearly four-and-a-half years.鈥�