Rise in German residential building activity drives construction growth in July

Sustained growth in residential building activity drove further growth in Germany’s construction work, showed July data. Total construction output was up for the 18th straight month in July. The expansion rate was modest, but more rapid than June’s. The headline seasonally adjusted Purchasing Managers Index rose to 51.6 in July from June’s 50.4.

Increased levels of housing activity in July underpinned the growth. Even if the growth pace in residential building output quickened since June, overall it was moderate and quite lower than the rates witnessed at the start of 2016. Meanwhile, civil engineering and commercial building activity dropped further in July, lengthening the current periods of drop to two and three months, respectively. But, contraction pace decelerated in both cases since June and were just marginal.

July’s survey’s results indicated towards drop in new order intakes for the second straight month in July. Certain firms noted a general lack of demand. The contraction pace was a bit stronger than what was witnessed in June; however, just marginal overall. Constructions hired additional employees in spite of a small drop in new business. Jobs growth has been registered for 13 consecutive months now, stated Markit.

Supply chain pressures continued in July, underlined by the average delivery times lengthening further, noted Markit. In the meantime, input costs continued to rise at a stronger rate in July. Over one-fifth of the survey panel reported an increase. Cost pressures have been rising for seven consecutive years. Meanwhile, optimism level amongst construction firms dropped to an eight-month low last month as certain firms are concerned about a deceleration in the economic growth, said Markit.