Construction in the European Union decreased by 1.2% y/y in March

In March 2023, production in the construction sector of the European Union decreased by 1.2% compared to the same period in 2022. This is evidenced by the Eurostat’s data.

Compared to February 2023, in March, seasonally adjusted production in the EU construction sector decreased by 1.9%.

The construction of engineering structures in the EU decreased by 2.3% m/m and 1.8% y/y, and construction of buildings (residential and non-residential) – by 1.8% m/m and 1.2% m/m.

In the first quarter of 2023, production in the construction sector of the EU increased by 0.4% compared to the same period. In particular, the construction of engineering structures increased by 0.8% y/y, and the construction of non-residential and residential buildings – by 0.3% y/y.

Since March 2023, construction activity in Europe has slowed down significantly. In particular, in January, EU construction production grew by 3.3% y/y, and in February – by 1.4% y/y. Thanks to the successful start of the year the quarterly indicator managed to increase despite a significant drop in March.

Stagnation of the EU construction sector has a negative impact on demand and sentiment on the domestic market of long-term rolled steel. Since the end of 2020, construction in the European Union has been in a long period of recovery thanks to significant government support, which stimulated demand for steel products, but since the beginning of this year the European construction sector has suffered due to macroeconomic problems and uncertainty in the market.

According to Eurofer forecasts, in 2023 European construction activity will decrease by 1.6% compared to 2022.

As GMK Center reported earlier, industrial production in the European Union in March 2023 fell by 3.6% compared to February, and by 1.3% by March 2022.

Inflation in the Eurozone in April 2023 accelerated to 7% compared to April 2022. In March 2023, this indicator was 6.9%. At the same time, annual core inflation, which excludes energy and food costs, slowed to 5.6%, returning to February’s value (5.7% in March). The decrease of this indicator was recorded for the first time since June 2022.

Also, the European Commission improved the prognosis of the growth of European Union economy in 2023 to 1% against the estimate of 0.8% in February. EU GDP is expected to grow by 1.7% in 2024 (preliminary forecast – 1.6%). The estimate of the growth of the Eurozone economy in the current year has been revised to 1.1%, in 2024 – to 1.6%.

Inflation forecasts in the Eurozone were also revised upward compared to the winter – to 5.8% in 2023 and 2.8% in 2024.