Construction: Capacity Utilisation Rates Approach Record Levels

The business climate in construction clouded over slightly in December, according to the results of the Ifo Business Survey. The contractors surveyed were slightly less satisfied with their current business situation than recently. Their assessment of the six-month business outlook, by contrast, hardly changed at all. Machinery capacity utilisation rates rose to 74.7% (season and weather-adjusted), which brought them to just below the highest value for Germany overall of 74.8% reached during the same period a year ago. Nearly 30% of contractors reported constraints on construction activity, primarily due to a lack of orders (16%). Staff shortages (7%) and unfavourable weather conditions (6%) played only a minor role. The order backlog climbed up to 2.8 months (seasonally and weather-adjusted) and only narrowly missed the figure seen during the same period last year. On balance, almost 19% of the firms surveyed felt that they had too few current orders-in-hand (December 2013: around 11%). According to contractors, price increases were only implemented sporadically. However, they do expect there to be scope for greater price increases in the near future. Contractors plan to recruit additional staff in the months ahead.