2020.10.0610:02:00UTC+00Germany Construction Sector Contracts Further

Germany's construction sector contracted further in September amid an ongoing decline in new orders and pessimistic expectations for activity over the year ahead, survey data from IHS Markit showed Tuesday.

The construction Purchasing Managers' Index fell to 45.5 in September from 48.0 in August. A score below 50 indicates contraction.

The main drag on total industry activity was from the commercial building sub-sector, where work fell sharply and at the fastest rate for three months.

Civil engineering activity also remained in negative territory, albeit with the pace of fall easing to the weakest since February. The only bright spot was housing activity, though the activity grew at the softest pace for three months.

New orders continued to decrease as clients were reluctant to commit to new projects amid the pandemic.

Companies continued to scale back workforce numbers and sentiment weakened for the first time in six months.

Turning to costs, data showed a slight uptick in the rate of purchase price inflation. There was a moderate increase in rates charged by sub-contractors.

Construction activity had looked to be stabilizing, so the drop in the PMI to a three-month low in September comes as a disappointment and shows the sector is not quite out of the woods yet, Phil Smith, principal economist at IHS Markit, said.