Germany October construction PMI 40.2 vs 41.7 prior

German construction activity slumped further in October, with both activity and new orders declining at a quicker pace. Adding to that is another notable round of retrenchment, highlighting rougher employment conditions. All main sectors showed a decline in activity, with housing once again being the worst performer. HCOB notes that:

“The downturn in Germany’s construction sector intensified in October. Analysing the headline activity index, one could
identify a tentative trend reversal during the summer months up until September. However, the latest survey results
contradict this interpretation, unfortunately indicating that there is still no sustained improvement in the German construction
sector. This impression is reinforced by a further significant drop in new orders in October.

“Activity across all construction subsectors fell again in October. The residential construction sector remains particularly
concerning, with building activity continuing to decline rapidly and persistent pressure on companies in the sector. In civil
engineering, the situation appears even less favourable than in the previous month. Likewise, there is no sign of recovery in
the commercial construction sector. Activity remains low, reflecting the ongoing weak demand for commercial spaces and a
reluctance to invest.

“Subcontractors are heavily impacted by the crisis, as their services are increasingly underutilised due to the weak economic
climate. As a result, they have been reducing their prices for three consecutive months. Despite these price reductions,
demand for subcontractor services has not increased.

“It is hardly surprising that future expectations in Germany’s construction sector remain bleak. According to some panellists,
the persistently weak economic conditions and political uncertainty in the country continue to suppress demand within the
sector. A comprehensive fiscal stimulus program would certainly benefit the industry. However, a robust program capable of
providing investment security is unlikely to be forthcoming from the current government.”

This article was written by Justin Low at www.forexlive.com.