Construction sector in Europe's leading markets contracted again in September

Construction activity in Europe's leading markets remained in contraction in September as well. According to Jefferies' assessment, the sector's condition in Germany, the UK and France was still weak, particularly in residential construction.

Germany's Construction PMI fell from August's 8-month high of 48.7 to 43.5 in September. The decline was mainly driven by a drop in residential construction, where activity showed the sharpest decrease since 2024. This came after the sector had shown some signs of stabilization in August.

Non-residential construction returned to contraction after a brief uptick in August, while civil engineering remained close to the neutral mark. Demand was particularly weak in the residential segment — new orders declined, and companies' expectations remained pessimistic. At the same time, growth in output prices reached its highest level since June, driven by rising fuel and energy costs.

The UK's Construction PMI rose from 44.3 to 46.1, marking the least pronounced decline in activity over the past eight months. However, the sector's outlook remained weak. Business optimism regarding the next 12 months fell to its lowest level since May, while new orders declined sharply.

Residential construction remained the weakest segment in the UK, followed by civil infrastructure. Non-residential construction, meanwhile, improved to near-neutral levels. Order volumes fell at the fastest pace in the past three months, driven by delayed project decisions and high borrowing costs.

France's Construction PMI rose from 37.3 in August to 39.8 in September, though the index remained in a zone of sharp contraction. All three main segments — non-residential, residential construction and civil engineering — continued to decline.

Non-residential construction was the weakest segment in France, followed by residential. The decline in civil engineering was comparatively smaller and proceeded at the slowest pace in the past eight months. Nevertheless, order volumes continued to fall, and companies' expectations dropped to their lowest level in 2026.