Construction of buildings and infrastructure across the eurozone rose at the fastest pace in almost five years during February, reflecting a period of unusually mild weather and indicating that businesses and households may be more willing to invest after years of caution.
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The European Union's statistics agency said on Thursday that output in the construction sector jumped 6.9% from January, the largest month-to-month rise since March 2012. Eurostat said output was 7.1% higher than in February 2016, the largest year-to-year gain since April 2014.
The February surge in construction was led by Belgium, home of many of the EU's shared institutions, where output soared by 18.7% from the previous month. The eurozone's largest members also recorded big rises, with German construction up 13.6% and French building up 8.1%.
Building work can be volatile from month to month, but the February surge follows a strong second half to 2016. It is also consistent with other signs that the eurozone's modest economic recovery gathered fresh momentum in the first quarter of this year, although there have been some pieces of economic news that have cast doubt on that impression.
As in other developed economies, construction suffered severely after the global financial crisis. But its recovery from that trauma was hindered by the eurozone's subsequent government debt and banking crises, which weakened the confidence needed to embark on new projects, and made the credit needed to fund them scarcer and more expensive.
As a result, construction activity remains well below its peak prior to the financial crisis. A sustained revival would be sign that the eurozone's modest recovery is broadening and lifting most parts of the economy, including those that suffered most damage.
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Official figures for economic growth during the first quarter will be released on May 3. But even if they do record a pickup in quarter-to-quarter growth from the modest 0.4% rate recorded in the final three months of last year, policy makers at the European Central Bank are likely to remain cautious.
"The economic recovery in the euro area is gaining momentum" and "there may be some upside risk in the very short-term," ECB Chief Economist Peter Praet said Wednesday. But looking farther out, he said the risks are "still tilted to the downside."
Write to Paul Hannon at email@example.com
(END) Dow Jones Newswires
April 20, 2017 05:14 ET (09:14 GMT)