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Sun April 11 2021

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German construction sees strong growth in new orders

9 Apr 15 German construction companies saw an upturn in activity in March as new orders increased for the first time in three years.

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As a result, the continued to add to their payrolls and increased their purchasing activity sharply. Suppliers’ delivery times deteriorated and input cost inflation reached a three-month high.

March’s data signalled a second successive monthly increase in construction activity in Germany. This was highlighted by the seasonally adjusted Purchasing Managers’ Index (PMI) – which is based on a single question asking respondents to report on the actual change in their total construction activity compared to one month ago – remaining above the neutral 50.0 threshold. At 53.3, up from 53.1 in February, the latest index reading was the highest since last November, with panellists commenting on good weather conditions and stronger demand.

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Survey data showed that the upturn in construction output was broad-based, with growth across all three broad categories of construction activity monitored by this survey. Housing was the best performing sector, with the latest rate of expansion close to February’s near four-year record. Commercial activity meanwhile increased at the strongest rate in a year and work on civil engineering building projects rose for the first time since last November. The latest improvement in Germany’s construction sector was underpinned by the first rise in new business in three years.

Oliver Kolodseike, economist at Markit, said: “The German construction sector ended the first quarter of the year on a high, according to PMI data. Activity continued to increase, with the latest rise stronger than that seen in February and broadbased by sector. The highlight of March’s data, however, is the return of new order growth, following a three-year period of contraction. The increase in new business was in fact the strongest in the survey’s history, with companies benefiting from strong demand and improving market conditions. “The sector looks set to show further improvements in coming months, as companies increased their purchasing activity sharply and continued to add to their payrolls. Furthermore, optimism towards the one-year outlook for activity was the best since early 2011.”

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