German Construction Activity Continues To Shrink

The downturn in Germany’s construction sector continued in December as spiraling prices, rising interest rates and weak investment dampened activity, survey results from S&P Global showed on Thursday.

The headline Construction Purchasing Managers’ Index registered 41.7 in December, up from 41.5 in November.

The reading is still firmly below the 50.0 threshold that separates growth from contraction.

Among three construction categories, housing activity was the weakest performing by far. Housing posted its biggest decline since February 2012 and commercial activity declined the most since last September. Meanwhile, the decline in civil engineering eased noticeably.

Companies reduced their purchasing activity for the ninth month in a row. Similarly, there was another reduction in employment. The pace of job shedding was the fastest since last September largely due to the non-replacement of leavers.

The continued fall in demand for both building materials and products alleviated the pressure on construction supply chains.

The survey showed that input prices fell sharply for a second straight month, taking it to its lowest since December 2021.

German constructors remained deeply pessimistic about the outlook in December but recovered further from last October’s near-record low.

Data published earlier in the day showed an unexpected decline in exports in November signaling that the economy is sliding into a mild recession. Exports decreased 0.3 percent on a monthly basis, reversing a 0.8 percent rise in October. Meanwhile, imports registered a sharper fall of 3.3 percent.

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