Germany's construction sector suffered a steep fall in activity in March, latest PMI data from IHS Markit showed, as the coronavirus disease outbreak caused building site closures and led to a widespread postponement of client orders.
Constructors scaled down their workforce numbers for the first time in almost five years, having signalled their lowest confidence towards future activity since the height of the global financial crisis.
March saw the headline seasonally adjusted IHS Markit Germany Construction Purchasing Managers’ Index (PMI) plunge to 42.0, its lowest for seven years.
The steep drop in activity followed a six-month sequence of growth, which had culminated in the PMI reaching a 25-month high of 55.8 in February.
The disruption caused by the COVID-19 outbreak affected all broad construction categories.
Housing activity, which has been the strongest performing sub-sector throughout most of the past year, registered its steepest decline since March 2013.
Commercial activity meanwhile returned to contraction after two months of growth, falling to the greatest extent for more than eight years.
However, the deepest downturn in activity was in civil engineering which, after nearing stabilisation in February, recorded its sharpest decline since early-2010.
Data showed a collapse in incoming new orders across the construction sector in March, amid reports of clients postponing new work due to the uncertainty surrounding the COVID-19 crisis.
The decline was the steepest seen since February 2010.
A lack of activity and site closures led constructors to cut staff numbers during March.
This ended a survey-record sequence of continuous job creation stretching back to mid2015.
The drop in construction employment was the most marked since December 2010, and it coincided with reports from some firms of staff being placed on short-time hours.
A willingness among constructors to trim staff numbers was consistent with a sharp slide in confidence towards the outlook for activity.
The month-on-month drop in expectations was the greatest in the survey's 20-plus-year history, and it left sentiment at the lowest since late-2008, following the collapse of Lehman Brothers.
Elsewhere, March's survey showed a sharp decrease in purchases of raw materials and other building products by constructors, alongside a reduction in the use of subcontractors.
However, amid disruption to supply chains and reports of transport issues (including border checks), constructors faced a marked increase in input lead times.
Delivery delays were the worst since October 2017.
Supply shortages meanwhile contributed to an increase in average purchases prices.
The rate of inflation ticked down to a three-month low, but was still solid by historical standards. ■