EU construction sector to recover by 1.1% in 2025 – EUROFER

The EU construction industry remains in recession, but 2025 could be a turning point. According to the European steel association EUROFER, the sector will show growth of 1.1% in 2024 after a decline, which will be the first positive result after three years of decline.

In the third quarter of 2024, construction decreased by 2.2%, the third consecutive quarterly decline. The reasons for this are high interest rates, rising material costs, labor shortages, and general economic uncertainty. Although the European Central Bank (ECB) has cut its key policy rate four times in 2024, the effect will be felt gradually, with a delay of several quarters.

Investment in residential construction continued to decline for the eighth consecutive quarter in 2024. In the third quarter, they declined by 3.7%, indicating weak demand for housing due to high mortgage rates. Commercial construction also remains under pressure due to uncertainty in the business environment.

At the same time, public construction, including infrastructure projects, is showing more stable development thanks to EU funding. Support programs such as NextGenerationEU remain the main source of investment in this segment, although their impact is gradually weakening.

Despite the negative trends, the situation is expected to gradually improve in 2025. Lower interest rates, albeit not immediately, should stimulate a recovery in housing demand, and infrastructure projects will continue to support the sector. In general, EUROFER forecasts the construction industry to grow by 1.1% in 2025, and in 2026 the pace may accelerate to 1.8%.

Earlier, EUROFER revised its forecast for apparent steel consumption in the EU in 2025, lowering the expected growth to +2.2% from the previous +3.8%. This reflects the ongoing difficulties in the sector amid global economic instability, high energy costs and growing imports.

Steel production in the European Union increased by 2.6% in 2024 compared to 2023 – to 129.5 million tons. Global steel production for the year amounted to 1.84 billion tons, down 0.9% year-on-year.