05.09.201908:31:00UTC+00German Construction Slowdown Worst In Over 5 Years

Germany's construction sector activity fell at the fastest rate in over five years in August, led by civil engineering, as order books continued to fall and expectations deteriorated, survey data from IHS Markit showed on Thursday.

The IHS Markit construction purchasing managers' index, or PMI, fell to 46.3 in August from 49.5 in July. The reading was the lowest since June 2014.

A reading below 50 suggests decline in the sector.

All three broad construction categories reported declines in activity for the first time since the snow-related disruption in March 2018.

Civil engineering work fell for the fifth straight month in August and at the quickest pace in almost one-and-a-half years.

Commercial activity dropped sharply and at the fastest pace since March 2013. Work on housing projects contracted modestly, but the fall was the worst since May 2014.

New orders fell for the fourth straight month in August and at the quickest rate since July 2014, amid a lack of tender opportunities, mainly from the public sector.

Activity growth expectations turned increasingly negative and fell to the lowest level in nearly four years.

Job creation was the slowest in ten months in August and purchasing activity contracted for the second time in four months.

Supply chain pressures were the weakest in four-and-a-half years in August due to lower demand for building materials and products. Lead times lengthened modestly.

Input cost inflation slowed for the sixth time in the past seven months, to the lowest since August 2016.

"Trends have turned increasingly negative, with new orders and expectations sinking deeper into contraction territory amid reports of growing concerns among clients about an economic slowdown and a lack of tender opportunities from the public sector," Phil Smith, principal economist at IHS Markit, said.

Separate surveys from IHS Markit showed that the Eurozone construction PMI fell to 49.1 in August from 50.6 in July, The sector contracted for the first time since October 2016.

France's construction PMI grew slightly to 52.6 in August from 52.4 in the previous month, rising at the fastest pace in eight months.

Italy's construction PMI contracted to 48.1 in August from 49.8 in the preceding month, declining at the quickest rate since March 2018.