European construction suffers steep quarterly fall

Construction output in the EU was -9,1% lower in the first quarter of the year than the same period last year. The fall was less pronounced in the Euro Area than the EU as a whole, and the building sector bore the brunt of the decline, with only a slight fall in civil engineering activity.

According to data from Eurostat, the year-on-year decline in the 16-country Euro Area was -8,7% for the quarter, compared to the -9,1% fall for the EU as a whole. However, the downturn in building activity was more sever in the Euro Area, with a -11,2% drop, compared to a -10,9% fall for the EU as a whole.

In the civil engineering sector meanwhile, a decline in year-on-year activity for the 27 country EU was contrasted by a shallower -1,6% dip in the Euro Area.

The reason for the disparity between the EU and Euro Area is partly due to some sharp falls in activity in Eastern European markets. Most striking of all was the -42,8% fall in Lithuanian construction activity in the first quarter compared to the first three months of 2008.

More significant than the impact of this small market however were the falls of -11,5% in the Czech Republic, -20,6% in Slovenia and -13,7% in Slovakia.

Another contributor to the decline in the non-Euro parts of the EU was the -11,3% decline in UK construction output.

But on the positive side, Eastern Europe's largest construction market, Poland, continued to grow in the first quarter of the year. The +3,3% rise in activity here was only bettered by the smaller Romanian market's climb of 3,5%.

The picture was similarly mixed within the Euro Area. On the downside, the German construction market experienced a -12,0% fall compared to Q1 2008 - a sharp deterioration compared to previous quarterly numbers. The French market meanwhile was down -7,4% and no data was available for Italy.

The Spanish construction market has suffered more than most during the decline with double-digit year-on-year declines being seen for most of last year. Data for the first quarter of 2009 indicates some flattening-out of the downturn, with construction output for the quarter -6,2% lower than Q1 2008. Although this doesn't sound particularly promising, it was a marked improvement on the previous quarterly falls of -19,7%, -18,6% and -17,3.