2023.02.0609:22:00UTC+00German Construction Sector Continues To Shrink

Germany's construction sector continued to contract in January as high prices and rising interest rates weigh on demand, survey results from S&P Global showed Monday. The construction Purchasing Managers' Index rose to 43.3 in January from 41.7 in the previous month.

The indicator remained below the neutral 50.0 mark that separates growth from contraction. Nonetheless, the reading was the highest in three months.

There were sustained downturns in activity across three broad categories. Housing and commercial activity declined in January but the rate of decline slowed. Meanwhile, civil engineering activity registered the quickest pace of fall since February 2021.

New orders slid for an eleventh straight month in January as elevated prices and tighter financial conditions weighed on new work.

Employment decreased for the tenth month in a row, survey showed. Constructors also reduced their purchases of building materials in line with falling demand. Building companies continued to face delay in the delivery of purchases.

On the price front, the survey showed that input price inflation ticked up after hitting a two-year low in December. Finally, constructors remained pessimistic about activity over the coming year amid ongoing concerns about various headwinds to demand. Activity, new orders and outlook among constructors remained deep in sub-50 territory to suggest further weakness in the coming months, Phil Smith, an economics associate director at S&P Global Market Intelligence, said.