Construction (Germany):
Further improvement in business outlook

The business situation in construction was evaluated only insignificantly more favourably than in the previous month: the slight improvement in building construction was offset by a weakening in civil engineering. The equipment utilisation rate remained unchanged at 71%, but outpaced the previous-year level by 7 percentage points. On average for all construction sections, the range of order backlogs remained at 2.5 production months (November 2005: 2.3 months) Correspondingly, the share of contractors that complained about constraints on building activity from too few orders fell from 33% to 15% within 12 months. The business expectations for the coming half year were marked by increased confidence, particularly for civil engineering. However, the scope for price increases will narrow in the coming months, according to the survey participants. A decrease in employee numbers was planned, on balance, but only by one in ten firms in contrast to 28% a year ago. The eastern German construction firms also reported an improvement of both the current business situation and the outlook, especially in structural engineering. The equipment utilisation rate was unchanged at 74% but clearly above the previous year level. Order reserves decreased from 2.1 to 2.0 months so that the dissatisfaction with order stocks continued to increase. On balance, one in five contractors planned staff reductions in comparison to 36% a year ago.