Financial News: German Construction Sector Stays In Deep Contraction Zone

German Construction Sector Stays In Deep Contraction Zone

(RTTNews) - Germany's construction sector continued to contract in April as rising interest rates and high construction prices dampened activity, survey results published by S&P Global showed on Friday. The HCOB construction Purchasing Managers' Index fell to 42.0 in April from 42.9 in the previous month.

The score has remained below the 50.0 mark that separates growth from contraction. Moreover, the reading signaled the weakest performance since December last year.

The fall in construction activity was broad-based in April with the housing sector posting the sharpest decline. Housing activity registered the deepest downturn since February 2012.

Civil engineering also declined at a faster pace. Meanwhile, work on commercial building projects dropped at a slower pace.

There was a sustained downturn in new orders in April. New orders declined at the quickest pace since November last year.

Building companies reduced their staffing levels in tandem with falling workloads. As well as reducing staffing capacity, companies scaled back their purchasing activity.

Consequently, pressure on construction supply chains alleviated. Delivery times on purchases shortened notably. Further, the survey showed that input price inflation eased to the lowest since August 2009.

Companies remained pessimistic about the outlook over the coming twelve months. That said expectations reached the highest since February 2022.

Although there are some vague signs of stabilization, there can certainly be no talk of an imminent turnaround, Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

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