Jul 28, 2023
EUROFER: European construction sector to witness slight recession in 2023

According to the Economic and Steel Market Outlook 2023-2024/Q3 2023 Report from the Economic Committee of the European Steel Association (EUROFER), in the first quarter this year construction output in the EU increased by 0.1 percent, following a decrease of 0.1 percent in the previous quarter, both year on year. Although there was a slight increase in construction output, the outlook for the market is not positive because, according to EUROFER, the positive trend in the output observed since the fourth quarter of 2020 is now being negatively impacted by the sustained increase in construction material prices, coupled with labor shortages in certain EU countries and growing economic uncertainty. Also, in line with real production volumes, gross fixed investment in construction in the EU countries dropped by 0.4 percent in the first quarter this year, after eight consecutive quarter-on-quarter increases. 

According to EUROFER, the sluggish increase in construction output recorded in the first quarter is usually a seasonal pattern of the sector seen in the same period of each year and it is expected to worsen in the next three quarters due to the impact of rising construction material prices, the shortage of construction workers, and in particular the impact of continued monetary policy tightening on housing demand. Accordingly, the sector is expected to experience a mild recession of 0.5 percent in 2023 and to recover by 0.7 percent in 2024.