Jefferies says European construction stays weak in September

Investing.com -- Construction activity across major European markets remained in contraction during September, according to Jefferies, with residential construction showing the most weakness across all countries except France.

Germany's construction PMI dropped to 43.5 in September from an 8-month high of 48.7 in August. The decline was driven primarily by residential activity, which posted its steepest fall since 2024 despite signs of stabilization in August. Non-residential construction returned to contraction after brief growth in August, while civil engineering remained near neutral levels. Demand stayed weak, particularly in residential, with new orders falling and expectations remaining pessimistic. Product inflation reached its highest level since June, driven by higher fuel and energy prices.

The UK's construction PMI rose to 46.1 in September from 44.3 in August, marking the least severe contraction in output for eight months. Business optimism for the next 12 months weakened to its lowest level since May and new orders declined sharply. Residential remained the weakest segment, followed closely by civil activity, while non-residential approached neutral levels. Order books deteriorated at the fastest rate for three months amid delayed project decisions and elevated borrowing costs. Product inflation moderated to 7-month lows but remained above pre-Iran conflict levels.

France's construction PMI improved slightly to 39.8 in September from 37.3 in August, though still showing steep contraction. All three end-markets remained firmly negative, with non-residential again the weakest segment, followed by residential. Civil engineering saw the softest contraction and its slowest decline in eight months. Order books continued to fall, with expectations at their lowest in 2026.

Italy's construction PMI reading improved to 46.5 in September from a 4-year low of 41.7 in August. All three end-markets continued to decline, with residential the weakest and the main drag on activity. Non-residential and civil saw more moderate contractions. New orders continued to fall due to subdued demand, though at a slower pace than in August. Business expectations for the next 12 months remained optimistic. Product inflation picked up to a 4-month high.

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