According to the report from HCOB, activity in the construction sector continued to contract in January, while the pace of contract accelerated compared to December.
The Germany construction PMI fell to 36.3 points from 37.0 points in December. The latest reading was again one of the lowest in the series history and indicative a sharp rate of contraction in overall building activity. Economists had expected the index to rise to 37.4 points.
The HCOB said that all three broad areas of the construction sector recorded a reduction in activity, with the housing activity remained the worst performer, exhibiting a rate of decline that was among the fastest on record. January also saw a deeper downturn in work on commercial building projects, which recorded the steepest drop since April 2020. Civil engineering activity fell at the slowest rate for four months. New orders in the construction sector declined again in January, but at a slower pace than in December. Reports from surveyed businesses highlighted hesitancy in the market amid a backdrop of tight financial conditions, high prices and economic uncertainty. Regarding the prospects for activity in 2024, about three times more firms expect a decrease in activity (38%) than those who forecast growth (12%). Employment in the construction sector continued to decline in January (for the 22nd month in a row), but the rate of decline slowed to its lowest level since July 2023. Average prices paid for purchases rose again in January, after increasing in December for the first time in eight months. Rates charged by subcontractors, on the other hand, continued to fall, in part reflecting an improvement in their availability.