2023.06.0611:36:00UTC+00German Construction Downturn Continues In May

Germany's construction sector continued to contract in May, largely due to a further plunge in housing activity amid weaker demand conditions, survey results published by S&P Global showed on Tuesday.

The HCOB construction Purchasing Managers' Index climbed to 43.9 in May from 42.0 in the previous month. However, any score below 50 indicates contraction in the sector.?

Moreover, the reading stayed within the contraction zone for the fourteenth successive month.

Within three broad categories, residential was the worst performing, with the fastest contraction seen in eleven years. In contrast, the commercial and civil engineering segments deteriorated at a slower rate.

New orders received by German construction firms declined at the steepest pace in eight months, linked to tightening financial conditions, high construction costs, and a wait-and-see attitude among customers.

Consequently, firms reduced their workforce numbers further in May. In addition, the rate of job loss has increased since last month.

On the price front, input prices fell for the first time since July 2009, though marginally. The decrease was mainly due to easing commodity prices, a reduction in the buying levels of contractors, and growing competition among suppliers.

Looking ahead, construction firms were pessimistic about the outlook for activity over the next twelve months.