Germany construction PMI rises to 6-month high in Oct, 12-month outlook improves on rising demand

Growth in constructions sector activity rose to a 6-month high during the period of October with commercial and residential building activity being the pillars of overall output growth. Employment and purchasing activity also expanded further and business confidence improved.

German construction activity expanded further at the start of the fourth quarter, as highlighted by the headline seasonally adjusted Purchasing Managers’ Index (PMI) rose to 52.9, up from 52.4 in September, signaling the strongest rise in building output in six months.

A marked increase in residential building was the main contributor to overall growth of construction output, with the respective rate of expansion the fastest since May. That said, commercial building output also rose further and for the third month running. The rate of increase accelerated since September, but was more modest than that for housing.

Further, input costs faced by German constructors rose further at the start of the fourth quarter, extending the trend that started in July 2009. The rate of inflation accelerated and was in line with the average over this period.

Moreover, the amount of new business received by German building firms fell for the first time in three months during October. Although, it remained modest overall, the rate of decline was the sharpest in just over a year. Meanwhile, confidence towards the 12-month outlook for construction output improved in October, with roughly 20 percent of the survey panel expecting growth, versus only 9 percent that predict a decline.