Upturn in German homebuilding continues

homebuilding

January 08, 2020- Construction activity in Germany reached a nine-month high in December driven by a surge in homebuilding.

The headline seasonally adjusted IHS Markit Germany Construction Purchasing Managers’ Index (PMI) – a measure of month-on-month changes in total industry activity – moved into stronger growth territory in December, climbing from November’s 52.5 to 53.8. It was the highest reading since last March and marked a further recovery from August’s five-year low.

“After a dip in the summer, the construction sector got back on track in the final quarter of 2019 and ended the year on a high note, with activity, new orders and employment all rising at the fastest rate since March last year,” said Phil Smith, principal economist at IHS Markit, which compiles the survey. “However, as was the case during most of the second half of 2019, growth of activity in December was confined to just homebuilding. Commercial activity stabilised in December on the back of its worst run for more than six years, leaving civil engineering as the main drag on the construction sector. Outside of homebuilding, constructors remain concerned about the outlook for activity, citing the influence of the wider economic slowdown and a lack of tenders for local infrastructure projects.”

Constructors increased employment and purchases of materials and other building inputs amid rising inflows of new work. However, concerns about the outlook for commercial activity and public sector spending on infrastructure continued to dampen confidence, however, with expectations at a five-year low.

Work on residential projects rose for the fourth month in a row and to the greatest extent since last March. Commercial activity meanwhile stabilised after falling in each of the previous fve months. Civil engineering activity remained in decline, falling in December for the ninth month in a row and at a quicker rate than in the previous survey period.

Overall inflows of new work were up for the second month in a row in December, having previously fallen for six straight months. The moderate rise in order book volumes was greatest seen since last March and was linked by surveyed businesses to stronger underlying demand for building projects.

Higher activity led constructors to add to their payroll numbers during December. Moreover, the rate of job creation accelerated for the second month in a row to the quickest since the opening quarter of 2019.

Looking ahead, constructors are downbeat about the outlook for activity over the coming year, citing concerns for commercial activity amid a broader economic slowdown, and worries about a lack of tenders for local infrastructure projects.

Source:- https://www.theconstructionindex.co.uk/news/view/upturn-in-german-homebuilding-continues

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