Impact of Covid-19 crisis on construction
Data from March 2021
Planned update of the article: April 2021
In January 2021, construction production increased by 0.9% in the EU compared with December 2020; in the euro area the increase amounted to 0.8%.
After an unprecedented decline in March and April (-25.5% in the EU), construction production increased dynamically in May 2020 (21.8%) and continued to increase but at a slower pace; in January 2021, 97.9% of the pre-crisis level of February 2020 had been regained.
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 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 Eurostat News Release 17 March 2021.
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 (partly) lifted the measures during the Christmas season.
Development of construction production in January 2021
In January 2021, construction production in the EU increased by 0.9 % compared with the month before and decreased by 1.8 % compared with January 2020. In the euro-area, there was an increase of 0.8 % compared with December 2020 and a decrease of 1.9 % compared with the previous year (please note that monthly data are calendar and seasonally adjusted while annual rates are only calendar adjusted.)
While construction production showed a strong growth in May (21.8 %), the growth during the summer was not sufficient to fully regain the losses from the crisis. Currently, the level of construction activity in the EU is about 97.9 % of the level in February (euro area 98.3 %).
Figure 1 shows the development of construction activities between January 2020 and January 2021 for total construction, buildings and civil engineering.
In the EU, the construction of buildings showed an increase of 1.1 % in January 2021 compared with December 2020, civil engineering increased by 0.8 %. For the euro area, the construction of buildings went up by 1.3 %, civil engineering grew by only 0.1 %.
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.
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 7.1 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 25 points in the EU and by more than 30 points in the euro area. In other words: during the first wave of the Covid-19 crisis, the construction index lost almost as much as during the five years in the aftermath of the economic and financial crisis.
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 January 2021 compared with April 2020, i.e. generally for the recovery phase, and for April compared with February, i.e. the peak of the crisis. The table also shows the rate of recovery, i.e. the index levels of January 2021 in comparison with the levels of February 2020.
The Covid-19 crisis was particularly strongly felt in Italy, France and Luxembourg, where construction activities fell by 70.5 %, by 65.0 % and by 55.5 % respectively between February and April. In France, the recovery between April 2020 and January 2021 was quite strong (198.3 %), and by now the pre-crisis level of construction activities has been regained and surpassed (no data for Italy and Luxembourg).
In several other countries where 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 January 2021, more than half of the countries for which data were available had regained a level above 95 % of the pre-crisis February level. However, as a result of the general decrease in construction activities in December and the moderate increase in January 2021, there are at the moment only five countries that have actually surpassed the February level (Belgium, France, Hungary, the Netherlands, and Slovenia.
Countries with a recovery level below 95 % are Bulgaria (94.1 %), Czechia (93.9 %), Germany (93.2 %), Austria (92.7 %), Poland (91.0 %), and Slovakia (89.9 %). 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.
Figure 4 shows the rate of change between January 2021 and January 2020 for those countries for which monthly data are available (the rates are calculated on the basis of calendar adjusted data.) Only in Hungary (11.0 %) has there been a considerable growth in construction activities during the last year. In France, construction activities increased by 4.3 %, in Slovenia by 4.2 %. The highest year on year declines in construction were observed in Slovakia (-14.5 %), Germany (-8.7 %), and Austria (-8.5 %). Between January 2021 and January 2020, construction fell by 1.8 % in the EU, and by 1.9 % in the euro area.
Source data for tables and graphs
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 STS-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.
- Construction, building and civil engineering (NACE F) (t_sts_cons)
- Production in construction (t_sts_cons)
- Construction, building and civil engineering (sts_cons )
- Production in construction (sts_cons_pro)