Construction: Business Situation Continues to Develop Favourably

The business climate in construction improved slightly in May, according to the results of the ifo Business Survey. The business climate index has been at a very high level for a long time. Contractors assessed their current business situation as marginally more favourable. Last month's record was broken in both civil and structural engineering. Capacity utilisation rates fell by 2 percentage points to 78.2%; versus 76% during the same period last year. 29% of the contractors surveyed complained of unfavourable weather conditions, while 11% cited a lack of orders and 9% reported a shortage of workers. A year ago a higher share of contractors complained of a lack of orders (15%); while staff shortages played a less important role (5%). In all construction segments on average the order backlog edged upwards by 0.1 to 3.8 months, versus the far lower level of 3.2 months in April. Firm reports suggest that prices hikes for construction services were implemented more frequently in May. Contractors also expect smaller price increases in the months ahead. They plan to recruit slightly more staff over the next three to four months than they did in April.