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Thu May 06 2021

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German construction continues to expand

5 May 17 Strong expansion in Germany’s construction sector has continued into the second quarter of the year.

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The rate of growth in total activity eased from March but was sharper than the average for the first quarter and the trend seen over the past four years. Growth was reflected in further strong increases in employment, purchasing and use of subcontractors, according to data from the latest Purchasing Managers’ Index (PMI) survey.

April’s data also signalled a slower rate of input price inflation, albeit one that remained sharp overall.

The headline PMI figure – which is based on a single question asking respondents to report on the actual change in their total construction activity compared to a month ago – remained well above the 50.0 ‘no change’ point in April. The PMI fell from March’s 13-month high of 56.4 to 54.6, but nonetheless indicated strong growth in German construction activity and was above the average for Q1 (54.2) and the trend level seen over the past four years (52.3).

IHS Markit Senior Economist Trevor Balchin said: “The latest PMI data for the German construction sector revealed an ongoing strong performance in April, despite most indexes retreating slightly from their March highs. Growth of construction activity remained historically strong, with sharp gains registered in all three main areas of the sector. Moreover, new orders rose at one of the fastest rates on record. This led to further demand for construction inputs, placing pressure on supply chains. Vendor delivery times lengthened to the greatest extent since January 2007, and purchase prices rose at the second-fastest rate in five years.”

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The commercial category registered the fastest rate of expansion, followed by civil engineering and residential respectively.

The volume of new work received by German construction firms rose for the sixth consecutive month in April. The rate of expansion eased since March, but was nonetheless one of the strongest registered since the survey started in September 1999.

The survey-record sequence of job creation in the construction sector continued in April. The rate of workforce growth eased from March’s 13-month high, but was sharp nonetheless.

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