German construction growth weakens

Construction output in Germany rose towards the end of 2014, but at a reduced rate of expansion - according to a new study.

The latest Markit Price Manager’s Index (PMI) revealed that levels of new orders had declined, as companies looked to reduce their employee base amid a challenging European economic backdrop.

While there were encouraging results from the homebuilding sector, a rise in inflation contributed to purchasing activity within the overall market being unchanged since November.

This was underlined in the performance rating index level, which was 50.5, down from 53.5 in November (remaining marginally above 50 points – which indicates growth).

With companies remaining cautious about hiring new staff, operating costs increased for the third month in a row. The market was also affected by suppliers’ delivery times also lengthening to their highest levels since June 2014.

In addition, confidence levels had also markedly reduced – with firms taking part in the survey forecasting that their levels of activity would reduce during 2015.

The survey results in Germany followed those of a similar survey for the UK, which also showed a slim margin of growth, with an index rating of 57.6. This was down from 59.4 achieved in November.

Oliver Kolodseike, economist at Markit, said, “Germany’s construction PMI remained in expansion territory at the end of the year, but the rate of activity growth slowed to only a marginal pace. The expansion in construction output was solely driven by a rise in housing activity, while work on commercial and civil engineering building projects declined.

“Furthermore, falling employment levels and a pessimistic outlook for the year ahead suggest that we’re unlikely to see any meaningful and sustainable upturn in construction output in the near-term.”