PUBLISHED March 27, 2026
Improved Sentiment in Construction Sector
According to data published by Statistics Luxembourg (STATEC), business sentiment in the country’s construction sector has shown noticeable improvement in recent months. Confidence indicators, based on company assessments of order books and employment expectations, gradually increased throughout 2025, although this upward momentum slowed at the beginning of 2026.
Activity Remains at a Low Level
Despite improving sentiment, actual construction activity continues to stagnate at a relatively low level.
The sector has not yet recovered from earlier declines, and overall output remains significantly below pre-crisis levels. This suggests that while expectations are improving, real economic performance is still lagging behind.
Labour Market Shows Positive Developments
There are, however, encouraging signs in the labour market. Employment conditions in the construction sector have stabilised, with job losses becoming less frequent and even a slight increase in employment observed toward the end of 2025.
This marks the first quarterly increase in nearly three years, indicating a gradual improvement in labour demand.
Job Offers Increase but Unemployment Stable
At the same time, job vacancies in the construction sector have increased significantly, rising by around one-third between mid-2025 and the end of the year. However, the number of job seekers from the sector has remained relatively stable, highlighting a mixed labour market situation.
Investment developments present a contrasting picture. While investment in residential construction has shown some improvement, spending on other types of buildings and civil engineering projects has declined. This uneven development reflects differing demand conditions across construction segments.
Investment developments present a contrasting picture. While investment in residential construction has shown some improvement, spending on other types of buildings and civil engineering projects has declined. This uneven development reflects differing demand conditions across construction segments.
Data on building permits does not yet indicate a clear recovery trend. Although there was a noticeable increase in authorised building surface in the third quarter of 2025, the overall level has remained low and volatile, making it difficult to determine whether a sustained recovery is underway.
Overall, the value added in the construction sector remains significantly below its pre-crisis average, estimated at around 30% lower than the levels observed between 2015 and 2021. This underlines the depth of the downturn and the slow pace of recovery.
The latest data suggests that Luxembourg’s construction sector may have reached a turning point, with improving sentiment and labour market conditions. However, the recovery remains fragile and incomplete, with activity levels still low and investment trends uneven.
Data on building permits does not yet indicate a clear recovery trend. Although there was a noticeable increase in authorised building surface in the third quarter of 2025, the overall level has remained low and volatile, making it difficult to determine whether a sustained recovery is underway.
Overall, the value added in the construction sector remains significantly below its pre-crisis average, estimated at around 30% lower than the levels observed between 2015 and 2021. This underlines the depth of the downturn and the slow pace of recovery.
The latest data suggests that Luxembourg’s construction sector may have reached a turning point, with improving sentiment and labour market conditions. However, the recovery remains fragile and incomplete, with activity levels still low and investment trends uneven.
