Construction: Business Situation in Building Construction Continues to Scale New Heights

After four successive increases the business climate indicator for construction hit a fresh record high in July. Although Ifo Business Survey participants assessed their current business situation slightly more cautiously than in June, they expressed greater optimism about their short-term business outlook. Machinery capacity utilisation rates edged upwards compared to last month to 74.7% (July 2015: 72.8%). Like the same period a year ago, 26% of the contractors surveyed reported constraints on construction activity. 11% complained of a lack of orders (July 2015: 18%), while 8% cited staff shortages and 7% cited adverse weather conditions as negative factors. The average order backlog across all construction segments remained at 3.3 months on average, versus 2.9 months for the same period last year. On balance, only 4% of the contractors surveyed were dissatisfied with their order books – versus almost 20% for the same period last year. Firm reports show that price increases were implemented on a similar level to last month. Survey participants also expect there to be greater scope for price increases in the near future and plan to increase their staff base over the next three to four months. Survey values have improved visibly since May.