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German Construction Sector Struggles With Ongoing Supply Disruptions

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development area in Southern Germany seen from above

The latest PMI data signaled another sluggish performance from the German construction sector in September, with supply bottlenecks and strong price pressures slowing down activity.

Source: IHS Markit

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The headline IHS Markit German Construction Purchasing Managers’ Index (PMI) registered 47.1 in September. The figure was still below the 50.0 no-change mark but up from August’s 44.6.

Civil engineering contributed to the weak performance of construction activity in September as the downturn in commercial activity eased since March.

Phil Smith, Economics Associate Director at IHS Markit, stated that supply chain bottlenecks, capacity constraints, and rising costs all contributed to the slowdown in the German construction sector.

A lack of availability of sub-contractors remained a major challenge in September, with the survey indicating an additional sharp decline.

The rate of new orders flowing in the construction sector remained slow in September, with construction firms reporting challenges with getting new work due to a cost-driven rise in prices.

German construction firms maintained a slightly negative forecast for activity over the coming year. Many firms pointed out concerns that high prices would hamper demand.

 

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