Building trades: another quarter of decline and a sector weakened by rising construction costs

This unfavorable situation is further aggravated by the consequences of the war in the Middle East, leading to a sharp increase in energy and construction material costs. For building tradespeople, this is the final straw. CAPEB is calling on public authorities to act now, without waiting for an even more serious downturn from which the sector would not recover.

Building trades: activity down at the beginning of 2026, a sector weakened by the international crisis and rising costs

In the first quarter of 2026, the activity of small construction businesses in France declined by a further 1,5% year-on-year. This decrease affected both new construction (-2,5%) and maintenance and improvement work (-1%), confirming the persistent fragility of the construction sector. Order books only reached 80 days of work, an insufficient level to secure the activity of construction tradespeople.

Energy renovation work, though essential for supporting the sector's growth, continues its decline, falling by 1,5% for the sixth consecutive quarter. Despite a slight improvement in some real estate indicators—existing property sales, mortgage lending, building permits, and construction starts—these signs have not yet translated into a concrete recovery for small construction businesses.

Rising costs: a new shock for building tradespeople

In this already deteriorating economic climate, geopolitical tensions in the Middle East are exacerbating the volatility of energy and raw material prices. As a result, 3 out of 10 tradespeople are already reporting a significant or very significant impact from rising oil prices. In 85% of cases, travel to construction sites is directly affected; in 44% of cases, the price increases are passed on through suppliers, transportation costs, and building materials.

Small construction businesses are thus facing a new external shock beyond their control. For many, this is the final straw, following several years of decline. This situation is reminiscent of the war in Ukraine, which in 2022 led to an average price increase of 30%, followed by two years of recession in the sector.

Cash flow, margins and financing: a deteriorating situation

At the beginning of 2026, the economic situation of small businesses continued to deteriorate. The balance of opinion regarding cash flow plummeted to -18 points. Furthermore, 25% of businesses expressed financing needs, estimated at an average of €24,000. At the same time, 19% experienced a decline in their profit margins, compared to only 6% who saw an increase. In 67% of cases, this deterioration was directly linked to rising costs.

Faced with these tensions, small construction businesses are no longer able to absorb repeated economic shocks.

Construction jobs: prospects still trending downwards

Employment in small construction companies confirms this worrying trend. By the end of 2025, approximately 12,200 jobs had been lost in a single year in companies with fewer than 10 employees. The outlook remains negative, with more companies planning to reduce their workforce than to hire.

CAPEB warns of a risk of the sector becoming bogged down.

For Jean-Christophe Repon, President of CAPEB: “The latest economic data shows that we are at a tipping point. Business activity, already declining for months, is being severely hampered by rising costs. With the current tensions in the Middle East, our companies are suffering a further shock that they can no longer absorb. This is one crisis too many. The indicators demand immediate action to prevent small construction businesses from becoming mired in economic stagnation and to enable them to return to dynamic, job-creating activity. The discussions held at Matignon on Monday, April 27, are a positive sign, but they must now be translated without delay into concrete and effective measures.”

For CAPEB, the conclusion is clear: without swift, concrete, and transparent measures from public authorities, the slight upturn observed at the beginning of the year could quickly be wiped out. The construction sector now faces the risk of a sudden halt to any prospect of recovery.

Illustrative image of the article via Depositphotos.com.