Germany November construction PMI 45.2 vs 42.8 prior | investingLive

• Prior 42.8

This at least marks some improvement in German construction activity, though continuing to keep in contraction territory. That said, civil engineering activity is seen improving for the fourth time in six months and employment conditions actually rose for the first time in over three-and-a-half years. HCOB notes that:

“The civil engineering sector is still sputtering but looks set to gradually pick up speed. Since the middle of this year,
infrastructure projects have been moving forward for a month or two at a time, only to then hit reverse. In November, the
sector was back on track for expansion. The more planned public infrastructure projects get underway in the coming months,
the longer this sector is likely to stay in growth territory.

“The recession in the construction sector eased somewhat in November. This is almost exclusively thanks to civil
engineering, where the index made a sharp jump from contraction to expansion. Public infrastructure projects, like the
renewal of rail lines, are playing an important role here. Residential and commercial construction, on the other hand, remain
stuck in the economic trough, especially housing, which is particularly deep. The increase in building permits reported by the
Federal Statistical Office suggests this sector could pick up again somewhat next year. In the short term, though, an
accelerated decline in order intakes can be observed. That lines up with the fact that construction companies as a whole are
predominantly pessimistic about their activity in the coming year.

“Stagflation still rules the construction sector, as costs have been rising steadily since spring and subcontractors’ invoices
are climbing higher too. At the same time, construction activity is declining. One explanation is probably the shortage of
skilled workers, which, according to the Association of German Engineers (VDI), continues to persist, especially among civil
engineers. On top of that, most building material prices have risen further from already high levels this year. The slump in
the broader construction sector can only be overcome if the economy as a whole returns to sustainable growth, improving
the purchasing power of consumers and businesses alike.”