S&P Global European Union Construction Purchasing Managers Index (PMI)

Construction PMI in Eurozone is compiled and published by IHS Markit. The indicator shows the activity level of the construction sector purchasing managers in the reference countries.

Often purchasing managers can track changes in market conditions prior to other company employees, because purchases precede company's production activities. Thus, they are among the first to see when conditions change for better or for worse. The sample for the survey is chosen so as to cover the maximum possible number of large companies across the country.

PMI calculation is based on data collected from monthly replies to questionnaires sent to purchasing executives in over 650 construction companies in Germany, France, Italy and Ireland. Managers are asked to evaluate current business and economic conditions in the national construction sector. The questionnaire covers the following economic variables:

• General business activity
• House construction activity
• Commercial construction activity
• Civil engineering activity
• New orders
• Employment
• Quantity of purchases
• Suppliers' delivery times
• Input prices
• Work with sub-contractors (activity, availability, rates, quality)
• Near-term future output

Survey participants provide relative estimates, that is, if the data is up, or if the data is down or if the data remains the same. The index is seasonally adjusted. Individual weights are given to polled companies. The final index value is calculated as a weighted value of the national indices, while the weights are assigned based on the national construction value added. Readings above 50 indicate that most of respondents positively characterize current business conditions. Readings below 50 mean worsening of business conditions.

PMI is one of the most popular indexes closely watched by analysts. It provides operational information covering the entire construction sector of the Eurozone. It is interpreted as a leading indicator of construction sector activity and inflation. Construction PMI growth is an indication of favorable market conditions and can be seen as positive for the euro quotes.