Construction: Business Climate Is Better Than Ever

The business climate indicator for construction rose to a new all-time high in May, according to the results of the Ifo Business Survey. The contractors surveyed were more satisfied with their current business situation than last month. The survey figure for assessments of the current situation also climbed to a new record high. On balance around 9% of survey participants reported a positive present situation. For the period of the last 25 years, by contrast, the share of unfavourable assessments was significantly higher; with an average of 31% of the contractors surveyed reporting a negative current business situation between January 1991 and May 2016. The contractors surveyed expressed greater confidence in business developments over the next six months in May than previously. Although machinery capacity utilisation fell, equipment was still very high at 75.4%. This figure for the same period last year was 72.7%. Almost three out of ten firms reported production constraints, with 15% of the contractors surveyed reporting a lack of orders (May 2015: 20%). Unfavourable weather conditions impaired a tenth of the contractors surveyed, while 5% complained of a lack of qualified workers. The order backlog rose to 3.2 months, and was thus 0.4 months above the same period of the previous year. The test results suggest that increases in the price of construction services were far more frequently implemented than last month. Survey participants also expect more scope for price increases in the months ahead. As far as their staff levels are concerned, more contractors expect to expand their staff base in the near future.