Germany's constructors recorded a decrease in total industry activity for the first time in nine months in July, according to the latest PMI survey.
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The reduction in output coincided with a third successive monthly fall in new orders.
With confidence towards future output also declining, constructors recorded one of the smallest rises in employment over the past three years.
A slowdown in input cost inflation to the weakest since October 2016 meanwhile reflected a further softening of supply chain pressures in the sector.
The headline seasonally adjusted IHS Markit Germany Construction Purchasing Managers’ Index (PMI ) – a measure of month-on-month changes in total industry activity – registered 49.5 in July.
The index had signalled no change in activity in June (50.0) but, falling for the fourth month in a row, it dipped into contraction territory for the first time since October 2018 and was at a 16-month low at the start of the third quarter.
The decrease in overall construction output in July reflected contractions in both commercial and civil engineering activity.
The decline in work on commercial building project was the first since January, but only modest.
For civil engineers, it was the fourth decrease in activity in as many months, with rate of decline accelerating to a solid pace.
Home building returned to growth in July, albeit with the increase in activity merely reversing the modest decline seen in June.
New orders at constructors remained on a downward trajectory in July, falling for the third month in a row and at the quickest pace since September 2014.
The bulk of anecdotal evidence attributed the drop in new work inflows to capacity constraints and already high backlogs, though there were mentions from some panellists of slowing demand.
As such, firms continued to take on additional staff and raise buying levels to help fulfil outstanding orders, though rates of growth slowed on both fronts.
The latest expansion in purchasing activity was only marginal.
This was reflected in a further easing of supply chain pressures across the sector.
Though lead times on building materials and products continued to lengthen, they did so to the smallest extent since early-2016.
Average prices paid for purchases meanwhile increased at a slower rate in July.
Easing for the fifth time in the past six months, the rate of inflation reached the weakest for over two-and-a-half years (although was still above the historical series average).
Constructors meanwhile faced a rise in sub-contractor rates during July, in part due to a lack of availability.
Finally, July saw constructors lower their expectations for activity in the year ahead.
For the first time in nine months, the number of firms expecting output to fall over the next 12 months exceeded those forecasting a rise, with the resulting index at its lowest since November 2015.
An uncertain outlook for commercial activity was a factor, alongside generally weaker economic sentiment. ■