The construction sector in France ‘slipped deeper into contraction’ in March, reporting its sharpest decline in activity levels since September 2024, according to the latest S&P Global France Construction PMI report.
According to the report, the headline total activity index fell to 38.4, down from 43.9 in February, marking an 18-month low and signalling a rapid contraction in construction activity.
“France’s construction sector is in a protracted downturn,” commented Joe Hayes, principal economist at S&P Global Market Intelligence. “There are no bright spots, with home building, commercial projects and civil engineering work all shrinking aggressively.”
All segments decline
All major segments of construction activity– housing, commercial building, and civil engineering – recorded sharper declines during the month, with the rates of decline relatively consistent across the board.
Civil engineering saw the steepest deterioration, with activity falling at its fastest rate since early 2021. Housing and commercial construction also weakened, reversing signs of stabilisation seen earlier in the year.
The report also indicated that demand conditions continued to worsen in France’s construction sector in March, with new orders declining for a fourth consecutive year-long period, prompting firms to reduce purchasing and scale back operations. Employment also fell, with companies reporting staff reductions through resignations and redundancies, marking the fastest rate of job losses in four months.
In addition, input cost inflation surged to a near three-year high, driven largely by rising energy prices following geopolitical tensions in the Middle East. Fuel, chemicals, and plastics were all cited as key contributors to higher costs, while subcontractors also increased their fees at the fastest rate since late 2023.
Energy price shock
“Construction material prices are now soaring, reflecting an immediate pass-through from the energy price shock induced by the war in the Middle East,” Hayes added. “It’s hard to picture a turnaround coming any time soon.
“Private demand is likely being squeezed by heightened uncertainty, which existed even prior to the war in the Middle East due to domestic political instability. Fiscal tightening also presents a headwind for public sector demand.” Read more here.
