Eurozone Construction Downturn Softens in December 2025 Amid German Rebound

06:11 AM EST, 01/07/2026 (MT Newswires) -- The euro area's construction slump eased for the second consecutive month in December 2025, amid renewed growth in Germany, according to survey data from Hamburg Commercial Bank and S&P Global published Wednesday. The HCOB Eurozone Construction PMI Total Activity Index ticked up to 47.4 in the final month of 2025 from the previous 45.4, indicating the softest contraction the sector has seen since February 2023. However, the index remains below the neutral 50 threshold for 44 months straight. The increase was attributed to marginal return to growth in Germany, where a surge in civil engineering activity ended a period of contraction dating back to April 2022. Conversely, quicker declines were reported in France and Italy in the final month of 2025, with both nations recording their steepest drops in two months and four months, respectively. Civil engineering saw a slight uptick in its rate of contraction but remained the top performer among the three monitored segments, as the total reduction in activity was the weakest among those surveyed. Commercial activity reported a softer decline, while the pace of contraction in housing notably slowed, reaching its softest level since May 2022. "At the sector level, conditions improved most noticeably in residential construction, but commercial building also looks a little less bleak. The big question is if this more positive tone in housing will carry over into the new year. Supporting factors include Germany's infrastructure program, which seems to be gaining traction, and low short-term interest rates. On the flip side, accelerated rising construction costs, relatively high long-term rates, and renewed weakness in incoming orders are acting as brakes," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said. The downturn in new orders intensified at the end of 2025, with new business plummeting in France, while Italy recorded a more pronounced decline compared with the previous month. New order intakes were also down markedly in Germany, but they were the smallest decline reported since March 2022. Employment levels were largely stable, following job cuts for nearly three years, as staff numbers edged up in Germany and Italy. On the other hand, French companies continue to reduce their headcount, but the rate of these cuts was at its slowest in seven months. Aside from reducing subcontractor use, construction firms in the eurozone were also pulling back their purchasing activity for the month. The cautious approach to spending was also seen in the builders' industry outlook, with sentiment regarding their future prospects falling to a three-month low.