German construction output expands at faster rate in September

Germany’s construction output grew at an accelerated rate in September as building activity increased throughout all there monitored categories. The headline seasonally adjusted purchasing managers’ index rose to 52.4 in September, a four-month high, from 51.6 in August. Germany’s construction output has grown for 20 straight months now.

The September survey data has underlined growth throughout all three monitored categories of construction output. However, residential building continued to be the main source, with the latest rise the most noticeable since May. Even if output also grew in the civil engineering and commercial building categories, the underlying rates of growth were just marginal.

In the meantime, constructors were able to safeguard new business for the second straight month in September. According to certain panellists, this is due to low interest rate environment and more tenders in the market. But, the pace of growth in new work was just marginal. In turn, increased new business urged firms to increase their purchasing activity in the month. Furthermore, the pace of rise of buying activity accelerated to a five-month high, noted Markit.

Employment also grew further in September, with 18 percent of the firms registering a rise in the number of workforce. Even of the pace of hiring decelerated from August, it continued to be firm. On the price front, survey results of September indicated towards ongoing cost pressure in Germany’s building sector. Input prices increased sharply. Certain panellists attributed this to increased demand. The pace of cost inflation was a bit sharper than in August.

Meanwhile, German constructors are on average confident that output would increase in the next 12 months. But, the level of positive sentiment dropped from August and continued to be quite below April’s peak, added Markit.