Germany’s construction activity decelerates in May

Construction companies in Germany have reported growth in new orders and output in May. However, the pace of growth in both the cases decelerated. Germany’s construction PMI dropped to a six- month low of 52.7 in May from April’s 53.4.

The survey data hints at a further rise in the country’s construction output through the second quarter. The panellists have attributed this to new business and processing of work outstanding. Housing activity grew further in May; however, the growth was slowest since October 2015. But the residential building activity continued to be the best performer out of three construction activity categories.

Commercial building activity also rose; however, the pace of expansion was moderate as compared to that of housing activity. Civil engineering activity declined marginally, first time in seven months. Meanwhile, constructors in Germany recorded a growth in new business in May for the sixth continuous month, but the rate of growth decelerated marginally since April. Construction firms were encouraged to increase their employees and buying activity due to the growing demand. The rate of job creation was the slowest in nine months; however, the rise in buying activity’s pace was strong.

Input costs continued to increase in May, hence extending the sequence of inflation to nearly seven years, said Markit. The rise in input prices in May was the strongest since July 2015. This was partially attributed to higher steel prices by survey participants.

Constructors in Germany have recorded positivity towards the activity’s 12-month outlook in May. The level of optimistic sentiment is highest on record. The optimistic view is partially because of the order book situation.