Construction: Assessments of Current Business Situation and Capacity Utilisation Hit New Record High

The business climate indicator for construction continued to rise in April. According to the results of the ifo Business Survey, assessments of the current business situation reached their highest level since German reunification – this applies to both civil and structural engineering. At the same time contractors’ expectations remained as optimistic as in March. Capacity utilisation, however, climbed to a new record level. This month’s capacity utilisation of 80.0% clearly exceeded the figure for the same period last year of 76.3%. In April 38% of the contractors surveyed reported production constraints. Like last year 23% of survey participants reported constraints due to adverse weather conditions. A lack of orders was cited as a constraint by 14% of survey participants (April 2016: 20%). This month’s order backlog remained at the all-time high reached in February of 3.7 months; versus an order buffer of 3.2 months a year ago. The survey results indicate that price increase for construction services were implemented more frequently. For the months ahead contractors expect further price increases, which reached their highest level since March 1992 this month. In terms of personnel, a larger number of contractors plan to grow their staff base in the months ahead.