German construction output grows in November at most rapid pace in eight months

German construction output expands at the most rapid pace in eight months in November as residential and commercial building activity grew further. New business returned to growth and both employment and purchasing activity rose in November. In the meantime, subcontractor availability worsened notably, which in turn resulted in a strong rise in subcontractor rates. The headline seasonally adjusted Purchasing Managers’ Index rose to 53.9 in November from 52.9 in October.

The overall rise in construction output mainly drove the residential building activity, with the respective rate of rise the strongest in seven months. Commercial building output also increased at a much rapid rate in the month.

But pace of growth in these two categories were lower than their respective first quarter averages. In the meantime, a contrasting trend was hinted in civil engineering. Output in this category dropped for a second continuous month. However, the pace of contraction was just marginal.

Data for November underlined a rise in new business wins at German constructors after a small drop in the prior month. The pace of growth in new work was the most solid in three months, although it was moderate overall. With new business and output increasing, building companies were encouraged to further add to their payrolls in November. Growth in job was sustained for the 17th month. But the pace of job creation was the least marked since June.

Purchasing activity also rose further in November, while the pace of growth rose slightly higher. Buying levels have risen for 16 straight months. The latest survey results underlined ongoing cost inflationary pressures in Germany’s building sector. Input prices increased at the most solid rate since June. Furthermore, the pace of inflation was above the survey’s long-run average. In the meantime, suppliers’ delivery times lengthened in November, but to the smallest extent in seven months.

Constructors continued to stay positive regarding the 12-month outlook for output. But, the level of positive sentiment dropped since October. German constructors reported that the availability and quality of subcontractors worsened in November.