EUROFER has raised its forecast for construction growth in the EU in 2025 to 0.1% y/y

The updated forecast signals a weak recovery in 2025 and a moderate acceleration in 2026

According to the latest EUROFER forecast, production in the EU construction sector will grow by 0.1% in 2025 compared to 2024. The association has revised its expectations towards slight growth, as the previous report predicted stability.

EUROFER has also slightly adjusted its outlook for 2026: the expected recovery has slowed from +2.3% y/y to +2.2% y/y, although the industry is still showing signs of gradual improvement thanks to monetary stimulus.

Despite the symbolic expected growth in 2025, the sector remains weak due to a combination of high interest rates, the delayed effect of monetary policy easing, and limited demand for housing. The ECB has already made eight cuts to its base rate, but their impact is not immediately apparent, especially in the mortgage market. That is why residential construction continues to decline, and in the second quarter of 2025, the decline continued (-2.7% q/q), marking the eleventh quarter of downward dynamics.

Total construction output in Q2 2025 grew by only 0.1% y/y, repeating the pace of the previous quarter. Investment in the sector also remains weak, at only +0.3% y/y. Against the backdrop of weak residential construction, civil construction looks relatively stable. Investment in infrastructure projects grew by 2.9% y/y, supported by government programs and the implementation of projects under NextGenerationEU.

Civil construction will remain a key source of support for the industry in 2025-2026. Planned infrastructure works are to be completed by the end of 2026, which encourages the accelerated use of available funding. Greater flexibility in EU budget rules could also have an additional positive effect.

However, the construction industry still shows low confidence. The sentiment index in the sector has remained negative since 2022. EUROFER expects that the more tangible impact of lower rates will only become apparent in the second half of 2026, when the recovery in residential construction becomes more noticeable. This factor should be the main driver of growth in the industry in the medium term.

As reported by GMK Center, the average annual production in the EU construction industry in 2024 decreased by 1.3% compared to 2023.

In September 2025, construction in the EU remained at the previous month’s level, while in the eurozone it decreased by 0.5% month-on-month. Compared to September 2024, the indicator decreased by 0.3% in the eurozone and increased by 0.5% in the EU.