German Construction PMI Rises To 16-Month High

Germany’s construction sector activity contracted at the slowest pace in 16 months in September, survey results from S&P Global showed on Friday.

The construction Purchasing Managers’ Index rose to 41.7 from 38.9 in the previous month. This was the highest since May 2023. However, the score remained below 50.0, indicating contraction.

There were softer declines in both housing and commercial activity, with the former still the worst performing of the three broad categories. Civil engineering recorded a slightly quicker reduction in activity.

The survey showed an accelerated fall in new orders as market uncertainty, tight financial conditions and high costs weighed on demand.

Incoming new work led companies to reduce workforce numbers in September, continuing the trend seen throughout the past two-and-a-half years.

Construction companies made deeper cuts to purchasing activity, which exhibited the sharpest fall in three months. Driven by weak demand for inputs, combined with lower fuel and commodity prices, average purchasing costs posted another fall.

There was further downward pressure on rates charged by subcontractors amid a notable improvement in their availability. The decline in rates charged was in fact the steepest seen since November 2012.

The survey showed deterioration in business expectations across the construction sector. Sentiment towards activity in the year ahead worsened considerably since August and was the weakest in 2024 so far. Falling new orders, the general health of economic conditions, and policy uncertainty were common concerns among businesses.

“The construction sector is starting to show some faint signs of life again, but we should not get carried away,” Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said. “Overall, things still look pretty bleak in the construction sector.”

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