Construction activity plummets in France

The latest PMI data revealed a sharp contraction in French construction activity during March, amid widespread site closures due to the coronavirus outbreak.

Meanwhile, evaporating demand saw new business collapse and firms cut their staff numbers for the first time since May 2017. 

There was also evidence of severe supply-side disruption, with suppliers' delivery times lengthening markedly.

Looking forward, French construction companies were pessimistic towards the 12-month business outlook.

The headline France Construction Purchasing Managers’ Index® (PMI®) – which is based on a single question asking respondents to report on the actual change in their total construction activity compared to one month ago – fell to 35.2 in March, down from 50.2 in February.

The latest reading pointed to the fastest decline in French construction activity for just over five years.

Panellists often cited disruption related to the COVID-19 outbreak when explaining the decline.

At the sub-sector level, the result was driven by a broadbased reduction.

After a marginal recovery in February, home building contracted at the sharpest rate since November 2014.

Meanwhile, commercial activity decreased for the first time in almost a year and civil engineering work fell at work fell at the quickest pace since June 2015.

March data also revealed tumbling demand across the French construction sector.

New business placed with building firms fell at the sharpest rate since the nadir of the financial crisis over 11 years ago.

Survey respondents overwhelmingly linked weaker demand to the COVID-19 pandemic.

Amid temporary site closures and softer inflows of new work, firms cut their staff numbers at the end of the first quarter.

The result represented the first workforce contraction since May 2017.

Moreover, the rate of reduction was the fastest for over four years and marked overall.

Supplier delivery times faced by French construction firms continued to lengthen in March.

In fact, the latest deterioration in vendor performance was the most severe since the 'gilets jaunes' protests in December 2018.

Anecdotal evidence suggested longer average lead times were driven by product shortages at suppliers.

On the cost front, input prices continued to rise in March, but the rate of inflation eased sharply.

The latest increase was the softest since November 2016 and historically subdued.

Finally, firms reported anticipation for a decline in activity over the coming 12 months, with many citing fears of prolonged coronavirus disruption.

In fact, business sentiment fell to the weakest level since November 2014. 




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