However, a fall in new orders had a negative impact on the sector’s future expectations.
Germany’s construction sector continued to expand in the final month of the year and, despite a further loss of new work, the rate of growth was quicker than in November. Employment and purchasing both rose on the back of increased output requirements, and also at faster rates than one month earlier. There was a marked rise in average purchase prices, as well as longer lead times from vendors. Expectations with regards to future performance were negative for the fourth month running.
The information comes from the latest Markit Germany Construction PMI survey. The survey’s headline figure was 53.7, up from 52.1 in November – figures over 50 indicate growth. The survey is based on a single question asking respondents to report on the actual change in their total construction activity compared to one month ago and the results signalled a solid and accelerated increase in the level of total construction activity in December, and one that was the most marked since August. The current run of growth now stands at eight months, which is the longest period for over six-and-a-half years.
As has been the trend in recent months, commercial activity was the primary driver of December’s expansion. Work in this particular area of the industry rose solidly and at the fastest pace for four months. Civil engineering activity was also up since November, albeit only marginally, while the level of work on residential projects dipped for a second month.
December’s survey meanwhile showed a decrease in new orders placed, which panel members attributed to a lack of opportunities to tender amid weaker demand and strong competition. Furthermore, this latest decrease in new business was the most marked since August.
Constructors were generally pessimistic about the year-ahead outlook for activity in December, and cited a lack of incoming new work as a reason for being downbeat. Sentiment was also slightly more negative than was the case in the preceding survey period.
Nevertheless, higher output requirements in December led constructors to raise staffing levels during the month. The rate of job creation quickened to the highest since June. Employment in the sector has now risen for nine months in a row.
The quantity of purchases was also higher in December than one month before. The degree to which buying levels rose was the sharpest for three months. Average prices paid for inputs rose at a slower rate in December, but the rate of inflation was sharp
Phil Smith, economist at Markit said: “Activity at constructors rose again in December, boosted in particular by a solid increase in work on commercial building projects. There was also a welcome return to growth in civil engineering activity following three straight months of contraction. An upshot from this improved performance was a faster rate of job creation in the sector.
“The short-term outlook isn’t too encouraging, however, with new orders falling at an accelerated pace in December. This was reflected in constructors’ expectations for future performance, which deteriorated slightly since the previous survey period.”
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