2024.01.0509:26:00UTC+00German Construction Sector Signals Further Steep Downturn

The German construction sector continued to deteriorate sharply at the end of the final quarter, impacted by the combined effect of market uncertainty and higher interest rates, survey results from S&P Global showed on Friday.

The HCOB construction purchasing managers' index rose to 37.0 in December from 36.2 in November. However, any score below 50 indicates contraction in the sector.

Among the three broad categories, housing activity was the main drag on the construction sector during December. The declines in both commercial and civil engineering activity deepened.

The sustained downturn in the construction sector was largely due to a lack of incoming new work, reflecting greater caution among customers amid a backdrop of economic and political uncertainty and high interest rates.

Consequently, German construction firms reduced both their staffing numbers and purchasing activity.

On the price front, input costs indicated a renewed rise in December due to the influence of an increase in road tolls. This contrasted with a third straight monthly fall in subcontractor rates.

Constructors were highly concerned about the outlook for activity in 2024, with business expectations remaining historically low in December.