The sector remained in contraction in February as the level of total industry activity fell at an accelerated rate. Employment was reduced over the month in accordance with lower output, as was purchasing activity.
The Markit Germany Construction Purchasing Managers’ Index (PMI) gives a single-figure snapshot of overall activity in the construction economy. February’s figure fell from January’s mark of 47.7 to 43.8, which was well below the 46.3 average over the current 11-month sequence of decreasing activity levels, and indicative of a substantial rate of contraction.
However, German constructors grew more confident about the year-ahead outlook for activity levels. Sentiment was positive for the first time since last May, with businesses (on balance) expecting output to be higher in 12 months’ time than current levels.
In line with the overall trend in activity, work in each of the sub-sectors monitored by the survey decreased at accelerated rates in February. Sharp reductions in both commercial building work and civil engineering activity were recorded, the former falling at the fastest pace for nine months. The latest decrease in home-building was solid, but weaker than the historical series trend.
Underpinning the weakness in the sector was a further reduction in the volume of incoming new work in February. New orders have now decreased in each of the past 11 months, and the latest reduction was marked and sharper than recorded in the month before.
Employment at German constructors fell for the fourth time in the past five months during February. The rate of job losses was quicker than in the preceding survey period, but nevertheless still only modest overall.
As well as cutting staff numbers on the back of reduced activity, businesses also bought fewer materials than in January. The decrease in purchasing activity was the sharpest for a year and the ongoing sequence of decline in buying now extends to seven months.
Lead times facing German constructors lengthened again on average in February, although the deterioration in supplier performance was less marked than in the prior month.
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