Germany’s construction sector contracted at the slowest rate in 10 months in June as the downturn in new orders slowed since May, results of the HCOB Purchasing Managers’ survey, compiled by S&P Global, showed on Thursday.

The construction Purchasing Managers’ Index rose to 39.7 in June from 38.5 in May. The score was firmly below the neutral 50.0 mark but hit the highest since August 2023.

The survey showed that the decline in housing activity slowed notably for the second straight month. Nonetheless, housing was the weakest performing among those monitored by the survey.

At the same time, contractions in both commercial and civil engineering activity were little-changed from May.

Constructors reported a fall in new orders due to challenging demand conditions. However, the rate of decrease was the slowest since February 2023.

Sentiment was the least negative since February 2022 underpinned by a cut in interest rates.

Falling workloads led to further job cuts across the construction sector, thereby stretching the current sequence of falling employment to 27 months.

Constructors slashed their purchasing activity again in June. Lower demand for building materials freed up capacity amongst suppliers.

Average purchase prices dropped for the third straight month and at the fastest pace in the sequence, the survey showed.

“For the first time since the beginning of 2023, the headline HCOB Construction PMI has risen for two consecutive months,” Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

“It appears that the cautious turnaround in interest rates is also beginning to make itself felt in the construction industry,” de la Rubia added.

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