Eurozone construction output fell 0.9% in August following a 1.5% gain in July and this was the first monthly contraction since March. There was a decline in both building and civil engineering work over the month and long-term stagnation will continue to be an important underlying concern.
In annual terms, the increase slowed sharply to 0.9% from 4.1% previously, although this was distorted and there should be a net improvement in the third quarter compared with the second quarter.
On a monthly basis, there was a slowdown in German construction for the month and French output also declined, while there was a recovery in Italy from a very low base.
Overall construction output fell sharply during the period from early 2008 until the beginning of 2013 with a slide in output of close to 30%. After a recovery in 2013, overall construction output has changed very little and remains slightly below the level seen in early 2014.
This lack of growth will maintain underlying concerns surrounding the growth outlook and structural weakness in the Eurozone economy, especially as the ECB has pursued a very aggressive monetary policy since the beginning of 2015. Interest rates are at zero and the bank has also been running the bond-purchase programme with long-term interest rates at extremely low levels, but there has been no significant improvement in activity.