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Sun April 11 2021

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German civils work falls sharply

7 Sep 15 Civil engineering activity in Germany has fallen at its sharpest rate in 11 months though construction overall continues to expand slowly.

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In contrast to marginal growth in housing and commercial activity, work on civil engineering projects contracted again in August.

Latest survey results have signalled that German construction companies have been adding to their payrolls and have increased their buying activity.

However, new orders fell for a third month running and companies expect activity to decline over the course of the next 12 months.

The seasonally adjusted Purchasing Managers’ Index (PMI) is based on a single question asking respondents to report on the actual change in their total construction activity compared to one month ago. It remained marginally above the neutral 50.0 threshold in August. However, the figure of 50.3 was down from 50.6 in July and the latest increase was the least marked in seven months and only fractional overall.

Housing activity continued to expand in August, thereby stretching the current period of growth to 11 months. That said, the latest rise in work on residential building projects was the weakest since January.

Work on commercial building projects also increased further in August. Despite reaching a three-month high, the pace of expansion was only marginal overall.

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August data highlighted a third successive monthly fall in new business placed with German construction companies. The pace of contraction accelerated to the quickest since January, with some panel members commenting on there being fewer tenders in the market.

Despite a further decline in incoming new work, German constructors added to their payrolls in August though the rate of job creation was only marginal.

Meanwhile, companies were encouraged to increase their buying activity in August. The quantity of materials purchased by German constructors rose for the first time since May, albeit only marginally overall.

Oliver Kolodseike, economist at Markit said: “Germany’s construction sector stutters ahead in August, with the headline PMI indicative of a near stagnation in building output. The marginal increase in overall construction output was attributed to fractional growth in work on residential and commercial building projects, while civil engineering activity contracted at the fastest pace in almost a year. Moreover, companies noted a lack of incoming new business and reported pessimism towards the 12-month outlook for activity. Overall, the survey data sit in stark contrast to accelerated growth in both the manufacturing and service sectors.”


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