Strong rise in housing activity lifts German construction PMI
Staff Writer |
Germany's construction sector ended 2018 on a stronger footing, according to the year's final PMI data, with an upturn in homebuilding driving the steepest rise in total industry activity for seven months.
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The improved performance was further supported by greater inflows of new business, which grew at the strongest rate for 11 months.
Accordingly, there were faster increases in both employment and constructors' purchasing activity.
Meanwhile, building firms continued to face strong cost pressures, with December's survey indicating elevated rates of inflation in both material prices and sub-contractor charges.
At 53.3, up from November's 51.3, the headline seasonally adjusted Germany Construction Purchasing Managers’ Index (PMI) indicated the strongest growth in total industry activity for seven months in December.
Driving this was a robust and accelerated increase in the level of housing activity, which rose at the fastest pace since last May.
Growth in commercial activity moderated slightly and was only modest overall, while work on civil engineering projects decreased for the second month running (albeit to a smaller extent than in November).
Anecdotal evidence indicated that milder-than-usual weather in some areas during the month helped to support activity levels.
The same factor also contributed to an increased inflow of new business, with constructors recording the strongest rise in order books for 11 months in December.
Greater workloads in turn had a positive impact on hiring.
Employment rose at the fastest rate for eight months, with the pace of job creation recovering further from the near two-and-a-half year low seen in October.
Concurrently, there was a renewed increase in constructors' use of subcontractors following the slight decreases seen in October and November.
The brighter picture also extended to constructors' purchasing activity, which showed the steepest rise for four months in December.
The latest survey showed a softening of capacity pressures across the sector.
The incidence of input delivery delays was the lowest since last May, while the extent to which subcontractor availability deteriorated was the least marked for almost two-and-a-half years.
Constructors continued to face sharply rising costs in December.
Although easing from November's 13-month high, the rate of input price inflation remained among the strongest seen over the past seven years, linked to higher energy and transport costs.
The pace of increase in subcontractor rates meanwhile remained at its highest since last May.
Finally, December's survey indicated that constructors remained only mildly optimistic about the outlook for activity.
Business confidence rebounded further from October's near three-year low, though the degree of positive sentiment remained much weaker than earlier in 2018. ■