Euro area: Tracking a rebound in construction in 2Q

Research evidence excerpt

Euro area: Tracking a rebound in construction in 2Q

J P M O R G A N Europe Economic Research

17 July 2026

Euro area: Tracking a rebound in

construction in 2Q

Incoming country-level data suggest that construction is rebounding from the Economic and Policy Research

weather-induced contraction in 1Q. Our aggregation of available national releases Mariana Monteiro

points to a 0.2% m/m increase in construction output in May — the official data (44 20) 3493-5147

will be released on Monday. The data are noisy and the aggregation—based on mariana.reispaivamonteiro@jpmorgan.com

incomplete information—is imperfect, but if our tracking proves accurate (and J.P. Morgan Securities plc

assuming no revisions to prior months), the average level of output in April–May

would be running at roughly 7% ar above 1Q levels — leveraging on a strong

March rebound carry over. That would more than offset the -3.4% ar contraction

in output recorded in 1Q. Notably, there has been a very large rebound in

construction Germany — with output in civil engineering, specialised activity and

buildings all up over the past 3 months. Output is also up in Italy and Spain, though

flat in France.

Based on the historical relationship between construction output and gross value

added (GVA), this would imply construction GVA growth of roughly 2%ar in 2Q

(assuming output is flat in June). While that would not fully offset the 3% q/q saar

contraction in GVA in the prior quarter, it would suggest that the sizable conflict-

induced shock in 2Q has not prevented at least a partial recovery. This is a welcome

outcome, given the risk that higher energy prices, increased costs for energy-

intensive goods and supply disruptions induced by the conflict in the Middle East

could have weighed more heavily on activity.