Impact of Covid-19 crisis on construction


Data from September 2021

Planned update of the article: March 2022

Highlights


In July 2021, construction production fell by 0.1% in the EU compared with June 2021; in the euro area construction production grew by 0.1%.

After an unprecedented decline in March and April (-25.6%), construction production in the EU increased dynamically in May 2020 (21.3%) but has since then more or less stagnated. In July 2021, only 98.6% of the pre-crisis level of February 2020 had been regained.

EU, development of construction production, January 2020 to July 2021, monthly data, seasonally and calendar adjusted (2015=100) - Source: Eurostat (sts_copr_m)

This article is part of an online publication presenting the development of short-term business statistics (STS) indicators in the Covid-19 crisis. The results presented in this article concern the development of the construction production index. Eurostat will continue to update the information on the effects of the Covid-19 crisis on industrial production, construction, trade and services in the online publication. For the publication of new data see the STS release calendar. Please also see the monthly News Release of 17 June 2021.


Full article

Covid-19 containment measures in Europe

Covid-19 infections have been diagnosed in all European Union Member States. To fight the pandemic, EU Member States have taken a wide variety of measures, including restrictions on travel into the EU and between EU Member States, cancellation of public events, restrictions on private gatherings, closing of schools, bars, restaurants, hotels and many shops. In Italy and Spain, non-essential production was stopped but the imposed measures in general had a negative effect on demand and thus on production in many areas.

The large majority of the prevention measures were taken during mid-March. Most of the prevention measures and restrictions were kept for the whole of April. In May, several of the measures were abandoned, or at least reduced in scope and severity, which had a strong effect on construction production. This recovery effect continued during the summer. With increasing Covid-19 cases after the summer holidays, several countries re-introduced some containment measures in September and October. The measures were further increased in November. In December, several countries (partially) lifted the measures during the Christmas season. In January and February, containment measures were re-introduced or increased in many countries due to rising infection rates. Since spring 2021, measures have gradually been rolled back.

Development of construction production in July 2021

In July 2021, construction production in the EU decreased by 0.1 % compared with the month before and increased by 32.5 % compared with April 2020 (the end of the most severe part of the crisis). In the euro-area, there was an increase of 0.1 % compared with June 2021 and an increase of 42.2 % compared with April 2020.

While construction production showed a strong growth in May 2020 (21.3 %), the growth during the subsequent months was not sufficient to fully regain the losses from the crisis. Currently, the level of construction activity in the EU is about 98.6 % of the level in February 2020 (euro area also 98.6 %).

Figure 1 shows the development of construction activities between January 2020 and July 2021 for total construction, buildings and civil engineering.

Figure 1: EU, development of construction production, January 2020 to July 2021, monthly data, seasonally and calendar adjusted (2015=100) - Source: Eurostat (sts_copr_m)

In the EU, the construction of buildings showed an increase of 0.3 % in July 2021 compared with June, civil engineering dropped by 1.8 %. For the euro area, the construction of buildings went up by 0.4 %, civil engineering fell by 1.7 %.

The development in early 2020 was quite unprecedented. For comparison, Figure 2 shows the average monthly development of total construction, building construction and civil engineering works for the years 2010 – 2019 in the EU (to make the various index levels comparable, all years have been re-referenced to an average of 100). On average, the construction indices drop about one or two index points between January and February to regain the former level in March and surpass it in April and May. With the beginning of winter, construction activities are then again somewhat reduced. The index changes between the months are about one point.

Figure 2: EU, average monthly development of construction production, 2010 – 2019, monthly data, seasonally adjusted.
Source: Eurostat (sts_copr_m)

Comparison with 2008

The global financial crisis in 2008 had quite a strong effect on the production in industry and construction (for a detailed analysis of the 2008 crisis on STS indicators see here).

Between February and April 2008, the index for total construction in the EU fell by 7.2 points (the buildings-index fell by 6.5 points, the index for civil engineering works by 9.9 points). In the months that followed, the total construction index and the sub-indices dropped again, although the reductions were generally smaller and there were also occasional increases. Over the following five years (until spring 2013), the construction index was, however, on a clear downward trend, reaching its lowest level of about 95 points in March 2013. During these five years, the total construction index lost 33 points; only afterwards did it start to slowly recover, although without regaining its former peak of over 128 points that it had reached in February 2008.

Between February and April 2020, however, the construction index had dropped by 29 points in the EU and by 34 points in the euro area. In other words: during the first wave of the Covid-19 crisis, the construction index lost about as much as during the five years in the aftermath of the economic and financial crisis.

Figure 3: EU, development of construction production during and after the global financial crisis (2008-2013), monthly data, seasonally adjusted (2015=100).
Source: Eurostat (sts_copr_m)

Development by country

Since the Covid-19 containment measures differed between countries as to timing and strictness, it was to be expected that the effects on construction production would also vary. Table 1 shows the growth rates for July 2021 compared with April 2020, i.e. generally for the ongoing recovery phase, and for April 2020 compared with February 2020, i.e. the peak of the crisis. The table also shows the rate of recovery, i.e. the ratio of the index levels of July 2021 and of February 2020.

The Covid-19 crisis was particularly strongly felt in Italy, France and Luxembourg, where construction activities fell by 71.1 %, by 64.4 % and by 52.2 % respectively between February and April 2020. In France, the recovery between April 2020 and July 2021 was quite strong (174.3 %) yet, due to the February 2021 decline, the pre-crisis level of construction activities which had been regained in July was only at 97.5 % (no data for Italy and Luxembourg).

In several other countries where early lock-down measures had been less drastic, the construction activity dropped only moderately between February and April 2020 (e.g. Finland) or even increased (Denmark, Romania, Sweden).

In July 2021, only five of the 16 countries for which data are available had regained the February 2020 pre-crisis level of construction activities (the Netherlands, Austria, Romania, Finland, Sweden). Some countries are relatively close to the pre-crisis activity level (Belgium, Bulgaria, Germany, Portugal) while some countries (Czechia, Spain, Poland, Slovenia, Slovakia) are still more than five percent away from the former levels. It should be noted that since the crisis, the ranking of countries in the recovery has changed from one month to the next to a considerable degree.

Table 1: Construction growth rates, July 2021/April 2020, April/February 2020 and recovery, monthly data, seasonally adjusted.
Source: Eurostat (sts_copr_m)

Figure 4 shows the rate of change between July 2020 and July 2021 for those countries for which monthly data are available (different from the other rates in this article, these rates are calculated on the basis of calendar adjusted data.)

Figure 4: Growth rates construction – July 2021 compared with July 2020 (%), monthly data, calendar adjusted.
Source: Eurostat (sts_copr_q)


Data sources

The latest results for the development of industrial production are published in monthly news releases by Eurostat.

A number of countries are not obliged to transmit monthly construction production data to Eurostat (Estonia, Greece, Croatia, Cyprus, Latvia, Lithuania, Luxembourg, and Malta).

According to the EBS-Regulation and the EBS-Implementing Regulation the construction production index is published around 45 days after its reference months. At this early stage it is normal that no complete coverage of data can be ensured by National Statistical Institutes and that data have to be estimated to some degree. As a consequence, revisions occur during the publications that follow.

The Covid-19 crisis posed additional problems for data collections, since, for example, closed shops and production sites could not be reached or did not supply any data. Moreover, it was not clear if missing data might not be due to businesses being permanently closed. As a consequence, it may be expected that revisions of the first data could be subject to greater revisions than is usually the case.

The data in this article are, for several Member States, based on fewer statistical observations than usual or alternative sources. For missing data, imputation and estimation methods were applied. Information on the compilation of short-term business statistics during the COVID-19 crisis can be found here and (specifically for STS) here.

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