January saw only modest decrease in total building activity, with the weakness mainly centred on civil engineering. There was the slowest decrease in new work since April 2012.
Rates of decline in activity and new orders slowed since December, while the rate of job losses eased to only a marginal pace. Expectations regarding the year-ahead outlook for output levels were also higher. Businesses meanwhile faced both a further deterioration in vendor performance and rising purchasing costs, despite substantially reducing their demand for materials over the month.
The ongoing downturn in German construction activity stretched to 10 months in January, with the Purchasing Managers’ Index (PM®) – a single-figure snapshot of overall activity in the construction economy – posting at 47.7. This was up on December’s 10-month low of 43.3, signalling a reduction in the overall pace of contraction.
The headline PMI was buoyed by slower rates of decline in both housing and commercial construction activity than those seen at the end of 2012.
But the pace of contraction in civil engineering activity remained marked, however, despite also easing since the previous survey period.
In line with the trend in total industry activity, the pace of decline in new orders received by German constructors moderated in January. The latest decrease in new work was the least marked since last April, although still substantial overall.
Demand for materials among German constructors continued to fall during January, with purchasing activity falling for the sixth successive month. The rate of decline was broadly unchanged from the solid pace recorded in December. Nevertheless, suppliers’ delivery times lengthened again over the month, and to the greatest extent since June 2012.
January data showed a second straight month-on-month decrease in employment in the German construction sector, as a number of businesses reduced payrolls numbers in accordance with a further drop in the level of incoming new work. The net rate of job losses was, however, only marginal, and weaker than that posted in the preceding survey period.
German constructors faced a rise in average purchase prices in January, which was partly attributed to higher raw material and energy costs. The overall rate of inflation remained slightly slower than the historical series trend, having eased from December’s seven-month high. January saw German constructors’ expectations regarding future performance rise for the third month running to the highest since May 2012. Although still slightly negative overall, sentiment was stronger than the average recorded over the series history and much improved on last October’s recent low.
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