Construction: Capacity Utilisation Remains High

According to the results of the Ifo Business Survey, the business climate in construction brightened again in December. The contractors surveyed were slightly more satisfied with their current business situation than in recent months. They also expressed far more confidence in the near future. Machinery capacity utilization rates rose to a new record high of 74.7% (seasonally and weather-adjusted), and thus exceeded the value for the same period of the previous year by nearly 4 percentage points. Almost a third of construction companies reported constraints on construction activity, mainly due to a lack of orders (14%) and unfavourable weather influences (13%). The order backlog continued to stagnate at around 2.9 months (seasonally and weather-adjusted); while this figure was 0.2 months lower during the same period a year ago. On balance, over 10% of the contractors surveyed considered their current order backlogs to be too small (December 2012: 20.5%). According to firms, price increases were implemented more frequently. Moreover, they expect greater scope for price increases in the months ahead. Contractors should expand their staff bases in the months ahead, but are slightly less eager to recruit new staff than in November.