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Solid rise in German construction activity in December

Staff Writer | January 8, 2018
Construction activity in Germany rose at the fastest rate for four months in December, buoyed by strong growth in commercial building work, the latest PMI survey data from IHS Markit showed.
German construction
Germany   IHS Markit Germany Construction PMI
Constructors created jobs and raised purchasing activity amid an increase in the level of new orders, though the respective rates of growth were down on the highs observed earlier in the year.

Cost pressures likewise moderated further after having peaked in October, while the incidence of delivery delays on building materials and products was less widespread than in the summer.

The headline seasonally adjusted Purchasing Managers’ Index (PMI ) – which measures changes in the level of total industry activity compared with one month ago – climbed to 53.7 in December, up from 53.1 in November and its highest reading since August.

The latest figure was just below the average for 2017 as a whole (54.3), which was the best for any calendar year since the survey began in 1999.

Commercial activity was the main driver of growth in December, rising strongly and at the fastest rate for four months.

There was also a moderate increase in the level of work on residential building projects, with the pace of expansion little-changed from that recorded in November.

Civil engineering activity, on the other hand, fell for the second month IHS Markit Germany Construction PMI running, albeit only modestly.

The level of new orders taken by German construction firms returned to growth in December, after having fallen for the first time in over a year in November.

Anecdotal evidence found that demand for new projects was supported by broader economic growth.

However, the extent of the rise in orders books was only slight, and much weaker than those seen during the summer, linked in part to ongoing capacity constraints.

Firms’ confidence towards future performance meanwhile improved at the end of the fourth quarter, recovering from a 12-month low in November.

The degree of optimism was the highest since July, albeit below the trend level for the year as a whole.

December saw further robust increases in both employment and the quantity of purchases made by constructors.

However, rates of growth lost further momentum in both cases, easing to lowest for six and eight months respectively.