Construction: Business Climate Clouds Over in Civil Engineering

In construction the business climate indicator fell slightly in November. The contractors surveyed assessed their current business situation as slightly less favourable. Their optimism about future developments also waned. Both indicators nevertheless remain at a very high level. Machinery capacity utilisation rose by 0.3 percentage points to 77.8%, thus exceeding the comparable figures for last year by 1½ percentage points. A third of survey participants reported constraints on construction activity, versus 26% the year previously. The constraints cited by contractors included a shortage of qualified workers (19%) and negative weather influences (6%). The average order backlog across all segments of construction remained unchanged at 3.8 months (November 2016: 3.5 months). According to firm reports, price increases in the future. In addition to the results of ifo's Business Survey, official statistics also signal that the present trend in construction prices will gather impetus in 2017. The price of structural work in the erection of conventionally constructed residential buildings, for example, rose by 3.0% in August 2017 compared to the same month last year (August 2016: + 1.7%). The drivers behind this development include the growing inequality between construction demand and production capacities of construction companies, as well as higher material costs. A slightly smaller number of contractors reported plans to hire staff over the next three to four months in November, but their willingness to recruit nevertheless remains high.