Construction: price pressure continues

The business climate in construction remained virtually stable in June. On balance, a third of the firms participating in Ifo Business Survey were still not satisfied with their business situation. However, they are less cautious with regard to the six-month outlook than they were in the previous month. The equipment utilisation rate remained largely unchanged; at 68% (seasonally and weather adjusted) the value of the previous year (69%) was nearly matched. 38% of the survey participants reported production constraints, particularly because of a lack of orders. The range of the order backlogs was reduced on average for all construction sectors; at 2.3 months (seasonally and weather adjusted) it was also lower than the previous year (2.5 months). According to the survey responses, pressure on prices has increased somewhat. The survey participants expect to have to continue to lower their prices in the coming months. The firms also expressed the need to reduce staff levels in future.