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Mon June 21 2021

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German construction has its best quarter in five years

6 Apr 16 There has been a solid rise in construction activity in Germany, roundsing off the best quarter in five years.

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Building activity in Germany continued to rise at a solid pace during March, with growth reported across all three categories of construction activity covered by the survey. Companies were encouraged to increase their staff numbers and purchasing activity further, despite new order growth slowing.

March data signalled a fourteenth consecutive monthly rise in construction activity in Germany, as highlighted by the seasonally adjusted Purchasing Managers’ Index (PMI). The survey is based on a single question asking respondents to report on the actual change in their total construction activity compared to one month ago. Despite falling from February’s recent high of 59.6 to 55.8 in March, the average reading over the first quarter as a whole (57.8) was the best in five years. A value of 50 marks no change.

The rise in building output was broad-based, with growth recorded across all three categories of construction activity. That said, rates of expansion slowed since February in all three cases. The strongest increase was seen in the residential building sector, with one-third of the survey panel signalling an expansion. Commercial building and civil engineering output also rose during March, albeit at weaker rates than housing activity.

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The amount of new business received by German construction companies rose for the fourth month running in March. However, the rate of growth slowed markedly and was only marginal overall.

Oliver Kolodseike, economist at Markit said: “Despite falling to a three-month low in March, the Germany Construction PMI signalled a sharp rise in building activity, thereby adding to hopes that the sector will contribute positively to economic growth in the opening quarter of the year. Moreover, capacity pressures continued to build, as companies reported an ongoing shortage of subcontractors, with the respective index falling to its lowest level in two-and-a-half years. The forward looking indicators suggest that building firms should remain busy: employment levels rose strongly and companies scaled up their buying activity in anticipation of rising demand.”

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